Wall Street’s three major indexes rallied on Tuesday to clock their biggest one-day gains in five months after Federal Reserve Chair Jerome Powell left the door open for a possible rate cut. Powell said the central bank would act “as appropriate” to address trade war risks a day after St.

The last time the benchmark S&P index showed a bigger daily percentage gain was on Jan. 4, when Powell turned more dovish after a late 2018 sell-off, with a promise that the Fed would be patient and flexible in its interest rate path. Investors have been betting the Fed would cut rates at least once by the end of 2019, according to CME Group’s Fedwatch, and Tuesday’s comments helped to back up these bets.

The Dow Jones Industrial Average rose 512.4 points, or 2.06 per cent, to 25,332.18, the S&P 500 gained 58.82 points, or 2.14 per cent, to 2,803.27 and the Nasdaq Composite added 194.10 points, or 2.65 per cent, to 7,527.12. The S&P 500 shed more than 6 per cent in May as investors feared a global growth slowdown while trade tensions ramped up between the United States and China and the US and Mexico.

Nolte said investors also were encouraged after Mexican President Andres Manuel Lopez Obrador said he was optimistic that a deal could be reached even as US President Donald Trump said he was likely to go ahead with new tariffs on all Mexican goods.