Morgan Stanley has joined a growing bloc of global brokerages forecasting a September interest rate cut by the U.S. Federal Reserve, citing Chair Jerome Powell's shift in tone toward labor market risks at the Jackson Hole symposium.

Federal Reserve chairman Jerome Powell signaled a possible interest rate cut in the months to come, sending stocks sharply higher.

Jerome H. Powell said the “balance of risks” across the economy had started to shift, raising the odds the central bank lowers borrowing costs at its next meeting in September.