US stocks: Wall Street ends sharply higher as Waller remarks ease rate hike fears
The three major indices ended Thursday’s session at least 1% higher
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[NEW YORK] Wall Street rallied on Thursday (Sep 4) as investors curbed their rate hike bets after US Federal Reserve Governor Christopher Waller said he would support holding the Fed funds target rate steady if data shows inflationary pressures are abating.
All three major US stock indexes closed at least 1 per cent higher, with the Nasdaq enjoying a boost from the “Magnificent Seven” group of AI-related megacap stocks. All three indexes were on track for weekly gains.
Fed Governor Christopher Waller told Reuters he would be inclined to let key interest rates stand should upcoming data confirm that price pressures are easing, but added he would support a rate hike if inflation fails to cool down.
Following Waller’s remarks, financial markets moderated expectations for rate hikes at the Fed’s September meeting, lowering the likelihood to 50.4 per cent from 63.2 per cent on Wednesday, according to CME’s FedWatch tool.
The benchmark US Treasury yield pulled back for the second straight session after touching its highest level since November 2023.
Rate-hike expectations had spiked in recent sessions, as long-dated bond yields surged to the highest levels in years on a global bond selloff driven by fears of inflation, ballooning debt and geopolitical uncertainty.
“Commentary from Fed Governor Waller (is) providing a broad lift for markets writ large,” said Bill Northey, senior investment director at US Bank Wealth Management, Billings, Montana.
“Underneath the broad market indices, we’re seeing continued influence by those late reporters from the second-quarter earnings reporting season,” Northey added. “And that’s driving some differentiation between spaces like semiconductors, where we had a high-profile report yesterday afternoon, and also within the software space, where we’ve seen some differential results, meeting or exceeding somewhat lower bar standards.”
Thursday’s economic reports were generally upbeat, with low jobless claims and an acceleration of the service sector.
On the other hand, the data showed services input prices hit their highest level since October 2022, and the international trade gap widened by 24.4 per cent.
On Friday, the Labor Department is due to release its August employment report, which is expected to show the US economy added 56,000 jobs last month, holding the unemployment rate steady at 4.1 per cent.
The Dow Jones Industrial Average rose 624.16 points, or 1.18 per cent, to 53,686.11, the S&P 500 gained 81.11 points, or 1.06 per cent, to 7,747.71 and the Nasdaq Composite gained 366.23 points, or 1.4 per cent, to 26,584.06.
Of the 11 major sectors in the S&P 500, consumer discretionary was the largest percentage gainer, while energy stocks were the laggards.
Nvidia rose 1.8 per cent after the company said it would buy developer platform Hugging Face for US$12.9 billion in a challenge to OpenAI and Anthropic.
But chipmaker Broadcom dropped 2.7 per cent following its weaker-than-expected fourth-quarter revenue forecast, a reminder that companies at the centre of the AI buildout have a high bar to clear.
Snowflake jumped 16.6 per cent after forecasting strong annual revenue, boosting sentiment across the software sector. ServiceNow, Salesforce and Adobe gained between 2.1 per cent and 6.5 per cent on the day.
Crypto-linked stocks rose after bitcoin rebounded following two straight sessions of losses, with Strategy jumping 17.6 per cent and Coinbase Global surging 10.1 per cent. Retail trading platform Robinhood Markets surged 16.6 per cent.
Advancing issues outnumbered decliners by a 1.98-to-1 ratio on the NYSE. There were 284 new highs and 186 new lows on the NYSE.
On the Nasdaq, 2,957 stocks rose and 1,771 fell as advancing issues outnumbered decliners by a 1.67-to-1 ratio.
The S&P 500 posted 14 new 52-week highs and eight new lows while the Nasdaq Composite recorded 71 new highs and 116 new lows.
Volume on US exchanges was 15.25 billion shares, compared with the 15.09 billion average for the full session over the last 20 trading days. REUTERS
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