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Wall Street Rallies as Waller Eases Rate Hike Fears
U.S. stock markets rose sharply on Thursday.
Investors felt less worried that the Federal Reserve would raise interest rates soon.
This happened after Fed Governor Christopher Waller said rates could stay where they are if inflation continues to cool.
He also said a rate increase could still happen if inflation remains too high.
The Dow, S&P 500 and Nasdaq all gained more than 1%.
Technology stocks helped the Nasdaq, but Broadcom fell because its sales forecast did not satisfy high expectations for artificial-intelligence business.
Nvidia rose after announcing plans to buy Hugging Face for $12.9 billion.
Snowflake’s strong forecast helped other software companies gain.
Investors are now waiting for Friday’s report on U.S. jobs for more clues about the Fed’s next move.
All three major U.S. stock indexes gained more than 1% after Federal Reserve Governor Christopher Waller said he could support holding rates steady if inflation pressures ease.
Markets lowered the implied likelihood of a Federal Reserve rate hike at the September meeting to 50.4%, from 63.2% on Wednesday.
The S&P 500 rose 1.07%, the Nasdaq Composite gained 1.40%, and the Dow Jones Industrial Average advanced 1.18%.
Broadcom fell after its fourth-quarter revenue forecast failed to meet high artificial-intelligence expectations, while Nvidia rose on its planned $12.9 billion purchase of Hugging Face.
Snowflake surged after forecasting strong annual revenue, lifting software stocks including ServiceNow, Salesforce and Adobe ahead of Friday’s jobs report.
- Who
- U.S. investors, Federal Reserve Governor Christopher Waller, and major technology and software companies.
- What
- Wall Street’s three major stock indexes rose sharply as investors reduced expectations for an imminent Federal Reserve rate hike.
- Where
- U.S. financial markets and Wall Street.
- When
- Thursday, with investors focused on the August employment report due Friday.
- Why
- Waller said he could support keeping interest rates steady if inflation pressures ease, while upbeat software results also lifted stocks.
Rate Hike Concerns Easing
Inflation Risks Remain
Federal Reserve policy
Rate Hike Concerns Easing
Waller said he would be inclined to hold the federal funds target rate steady if upcoming data confirms that inflation pressures are abating.
Inflation Risks Remain
Waller said he would support a rate hike if inflation fails to cool down.
Economic data
Rate Hike Concerns Easing
Low jobless claims and an acceleration in the services sector indicated generally upbeat economic conditions, while markets reduced September rate-hike expectations.
Inflation Risks Remain
Services input prices reached their highest level since October 2022, and the upcoming jobs report could provide further evidence affecting the Fed’s decision.
Artificial-intelligence stocks
Rate Hike Concerns Easing
Nvidia’s planned $12.9 billion acquisition of Hugging Face and gains among major AI-related companies supported the Nasdaq.
Inflation Risks Remain
Broadcom’s decline showed that companies central to the AI buildout face very high investor expectations and can fall when forecasts disappoint.
Key facts
- S&P 500 close
- 7,748.27, up 81.67 points or 1.07%
- Nasdaq Composite close
- 26,584.21, up 366.39 points or 1.40%
- Dow Jones close
- 53,689.32, up 627.37 points or 1.18%
- September rate-hike likelihood
- 50.4%, down from 63.2% on Wednesday, according to CME’s FedWatch tool
- Expected August job growth
- 56,000 jobs, with unemployment expected to remain at 4.1%
- Nvidia-Hugging Face deal
- Nvidia said it would buy Hugging Face for $12.9 billion
- Notable market movers
- Broadcom fell after its forecast, while Snowflake, ServiceNow, Salesforce and Adobe rose
Quotes
Bill Northey
Senior investment director at U.S. Bank Wealth Management in Billings, Montana
“Underneath the broad market indices, we're seeing continued influence by those late reporters from the second-quarter earnings reporting season. 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.”
livemint.com
“Commentary from Fed Governor Waller (is) providing a broad lift for markets writ large.”
livemint.com
Sources
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