Wall Street Rallies as Fed’s Waller Eases Rate Hike Fears

Following the afternoon commentary, all three major U.S. stock indexes finished the session up at least 1%. The Dow Jones Industrial Average climbed 624.16 points, or 1.18%, to close at 53,686.11. The S&P 500 added 81.11 points, or 1.06%, to finish at 7,747.71, while the Nasdaq Composite advanced 366.23 points, or 1.40%, to end at 26,584.06.

Fed Rate Expectations Shift After Waller Remarks

Federal Reserve Governor Christopher Waller told Reuters that he would be inclined to leave key interest rates unchanged should upcoming economic reports show continued price moderation. However, he maintained that he would still back an interest rate hike if inflation fails to cool down.

Financial markets reacted swiftly to the guidance. CME’s FedWatch tool showed that the implied probability of a rate hike at the Fed’s upcoming September meeting dropped to 50.4%, down from 63.2% the previous day, according to Reuters reporting. The adjustment helped ease a global bond selloff driven by mounting concerns over inflation, ballooning debt, and geopolitical uncertainty.

“Commentary from Fed Governor Waller (is) providing a broad lift for markets writ large,” Bill Northey, senior investment director at U.S. Bank Wealth Management in Billings, Montana, told Reuters.

Benchmark U.S. Treasury yields pulled back for the second session, easing away from its highest level since November 2023. The relief in bond yields helped propel rate-sensitive equities across the broader market.

Sector Performance and Corporate Earnings Influence

Underneath the major index gains, individual corporate results and megacap tech movements shaped sector performance. Consumer discretionary stocks led the 11 major S&P 500 sectors as the session’s top percentage gainer, while energy stocks lagged behind the broader market rally.

Nvidia shares rose 1.8% after the company announced plans to acquire developer platform Hugging Face for $12.9 billion, staking a major claim in the competitive artificial intelligence landscape against OpenAI and Anthropic. Meanwhile, chipmaker Broadcom dropped 2.7% following a weaker-than-expected fourth-quarter revenue forecast that highlighted the high performance bar facing AI-infrastructure suppliers.

In the software sector, Snowflake surged 16.6% after issuing a strong annual revenue forecast. That report lifted sentiment across enterprise tech names, driving gains between 2.1% and 6.5% for ServiceNow, Salesforce, and Adobe.

Upcoming Labor Data and Economic Indicators

Thursday’s domestic economic calendar offered a mixed picture for investors. Jobless claims remained low and the service sector showed acceleration, though incoming data also revealed that services input prices reached their highest level since October 2022, and the international trade gap widened by 24.4%, according to Reuters.

Investors are now turning their attention to the U.S. Department of Labor’s upcoming August employment report. Economists surveyed expect the data to show the national economy added 56,000 jobs last month, keeping the unemployment rate stable at 4.1%.