US stocks surge as Fed's Waller hints at rate pause

Wall Street rallied on Thursday, with the Dow Jones Industrial Average climbing 624.16 points to 53,686.11, the S&P 500 gaining 81.11 points to 7,747.71 and the Nasdaq Composite adding 366.23 points to close at 26,584.06. The surge followed Federal Reserve Governor Christopher Waller’s remarks that he would back a hold on the Fed funds target rate if incoming data show inflation easing – a cue that immediately trimmed market expectations for a September hike.

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 still back a hike if inflation failed to cool. His comments were taken as a “broad lift for markets writ large,” according to Bill Northey, senior investment director at U.S. Bank Wealth Management. The view was echoed by analysts who noted that the Fed’s stance has a direct knock‑on for equity valuations, especially in the tech‑heavy “Magnificent Seven”.

Media additions

"Commentary from Fed Governor Waller (is) providing a broad lift for markets writ large,"

Bill Northey, senior investment director, U.S. Bank Wealth Management, via Yahoo Finance

Across the three major indexes, sectoral performance mirrored the broader rate‑pause optimism. Consumer discretionary led gains, while energy lagged behind the market‑wide rally. AI‑related megacap stocks continued to buoy the Nasdaq; Nvidia rose 1.8% after announcing a $12.9 billion acquisition of developer platform Hugging Face. By contrast, Broadcom slipped 2.7% on a weaker‑than‑expected fourth‑quarter revenue forecast, underscoring the high bar facing companies at the centre of the artificial‑intelligence build‑out.

Software stocks added further colour. Snowflake jumped 16.6% after forecasting strong annual revenue, while ServiceNow, Salesforce and Adobe each posted gains in the 2.1%–6.5% range. Crypto‑linked equities rallied as bitcoin recovered from two days of losses; Strategy surged 17.6%, Coinbase Global rose 10.1% and Robinhood Markets leapt 16.6%. Advancing issues outnumbered decliners on the NYSE by a 1.98‑to‑1 ratio and on the Nasdaq by a 1.67‑to‑1 ratio, highlighting the breadth of the rally.

While the equity market cheered, the backdrop remained volatile. Oil prices, spurred by the escalating Iran‑U.S. Conflict, hovered near six‑week highs. LiveMint noted Brent crude at $96.22 a barrel and U.S. West Texas Intermediate at $91.79, levels that keep inflationary pressure in the Fed’s peripheral view. Earlier in the session, Brent briefly slipped 11 cents to $95.52 while WTI rose 29 cents to $91.30, according to Econotimes. The same reports highlighted a dip in the U.S. 10‑year Treasury yield to 4.754% after a four‑basis‑point decline.

Currency markets mirrored the equity sentiment. The dollar slipped against the euro and the pound after Waller’s remarks, with the euro edging higher and sterling nudging up, as detailed by Econotimes. Gold jumped more than 2%, with spot gold reaching $4,488.54 per ounce and futures settling 2.8% higher at $4,539.9, reflecting the reduced appetite for a rate hike.

European markets, though still feeling the strain of higher oil prices, found a modest recovery. The pan‑European Stoxx 600 rose 0.49% to 649.1 after three straight days of losses, according to Businesstimes. Soitec’s 10.3% jump powered the index, while the European Central Bank was expected to lift borrowing costs to 2.5% at its next meeting. Kathleen Brooks, research director at XTB, warned that “until there is a complete stop to attacks from both sides it is hard to see commodity prices pull back in a meaningful way,” emphasizing the intertwined nature of geopolitical risk and market sentiment.

The rally also intersected with corporate news outside the tech arena. Campbell’s slumped 7% after issuing a disappointing annual forecast and cutting its quarterly dividend by more than a third, a move aimed at accelerating debt reduction and targeting $500 million in cost savings by 2030, as reported by Economictimes. The broader earnings backdrop featured mixed signals: while Nvidia’s acquisition news lifted sentiment, Broadcom’s forecast missed expectations, reminding investors that AI‑driven growth remains contingent on execution.

Key figures at a glance

• Dow Jones: +624.16 points (1.18%) to 53,686.11
• S&P 500: +81.11 points (1.06%) to 7,747.71
• Nasdaq Composite: +366.23 points (1.40%) to 26,584.06
• Brent crude: $96.22 per barrel (peak); briefly $95.52
• U.S. 10‑year Treasury yield: 4.754% after a 4‑bp dip
• Gold spot: $4,488.54 per ounce
• Consumer discretionary: largest % gainer (no exact % disclosed)
• Energy sector: laggard (no exact % disclosed)

What to watch next

• Friday’s U.S. Non‑farm payrolls report, projected to add 56,000 jobs and keep unemployment at 4.1%, will test Waller’s “rate‑pause” narrative.
• The Federal Reserve’s September policy meeting, where the likelihood of a hike slipped to roughly 50 % after Waller’s comments.
• Further oil‑price volatility as the Iran‑U.S. Conflict evolves; any escalation could push Brent back above $100.
• European Central Bank’s upcoming decision on borrowing costs, with markets pricing a move to 2.5%.
• Earnings releases from AI leaders and semiconductor makers, which could sharpen sector‑specific moves.

In sum, the market’s bounce reflects a delicate balancing act: investors are buoyed by the prospect of a Fed rate pause, yet remain wary of geopolitical shocks and the earnings quality of AI‑fueled growth stocks. As the labor market data rolls in on Friday and the Fed convenes later in the month, the trajectory of the rally will hinge on whether inflation truly cools enough to sustain the policy pause that Waller hinted at.