[New York Stocks] Major Indexes Close Up Over 1% on Fed's Waller Hinting at Rate Hold

Amid remarks from Federal Reserve Governor Christopher Waller signaling a possible pause in rate hikes, U.S. Treasury yields fell, leading all three major New York stock indexes to close higher on September 3 (local time).

On the New York Stock Exchange (NYSE), the Dow Jones Industrial Average finished at 53,686.11, up 624.16 points (1.18%) from the previous session. The large-cap S&P 500 index rose by 81.11 points (1.06%) to close at 7,747.71, and the tech-heavy Nasdaq Composite climbed 366.23 points (1.40%) to finish at 26,584.06.

New York Stock Exchange. New York, USA – Photo by Yoonju Hwang

The main driver behind the rally in the New York market that day was Governor Waller's remarks. At a Reuters-hosted event, Waller stated, "If progress continues towards the 2% inflation target, I would be inclined to support keeping policy rates at current levels."

However, he also emphasized, "If inflation data comes in hot, we will consider raising rates," highlighting that the inflation data for August, to be released next week, will be important.

Following Governor Waller's comments, market expectations for a rate hike in September dropped significantly. In the federal funds futures market, the probability of a 0.25 percentage point increase this month fell to about 50%. Earlier in the week, the likelihood of a rate hike had been reflected at around 70%.

Krishna Guha at Evercore commented, "Ahead of the September meeting, Governor Waller gave an optimistic assessment of recent inflation trends," adding, "We maintain our view that the Fed is more likely to keep rates steady rather than hike in September." He also noted, "The decision is extremely close and ultimately depends on the next inflation report."

In the bond market, concerns about rate hikes eased, causing Treasury yields—particularly short-term—to fall. The 10-year U.S. Treasury yield slid to as low as 4.74% during the session before closing at 4.758%.

International oil prices ended mixed. On the New York Mercantile Exchange, West Texas Intermediate (WTI) crude for October delivery rose 0.32% from the previous session to settle at $91.30 per barrel. At the ICE Futures Exchange, Brent crude for November delivery closed at $95.52 per barrel, down 0.12% from the previous session. 

Market attention is now focused on the U.S. August jobs report set to be released on September 4, as well as next week's scheduled consumer price index (CPI) and producer price index (PPI) releases.

According to expectations aggregated by Bloomberg, nonfarm payrolls are anticipated to increase by 55,000 in August, rebounding from an unexpected decline in July. The unemployment rate is forecast to remain at 4.1%.

Tom Essaye, president of Sevens Report, analyzed, "If the employment indicators come in as a 'Goldilocks' scenario—not too strong or too weak—concerns over additional rate hikes will subside and Treasury yields will fall." He added, "Conversely, if the data comes in excessively strong, it will further heighten fears of more rate increases."

By sector, major tech stocks showed strength. Nvidia rose 1.80%, Micron Technology 0.22%, Intel 1.80%, Meta 3.01%, SpaceX 6.42%, and Tesla 5.42%, each posting notable gains. On the other hand, Seagate fell 1.23%, AMD slipped 0.20%, and SK hynix ADR dropped 1.05%.

Robinhood drew attention as it soared 16.57% from the previous day. The easing of rate hike concerns following Governor Waller's remarks led to Bitcoin surpassing $80,000, spurring buying interest in Robinhood, which sees a high proportion of cryptocurrency trading. Additionally, positive evaluations of Robinhood's growth potential on Wall Street also contributed to the rise in its share price.

This content was produced with the assistance of AI translation services.