Wall Street Rises After Waller Signals Openness to Rate Hold; Nasdaq Gains 1.4%

U.S. stocks rallied across the board as concerns about a September interest-rate increase by the Federal Reserve eased. Risk appetite improved after Fed Governor Christopher Waller left open the possibility of holding rates steady if inflation continues to cool, pushing Treasury yields lower.

On September 3, the Dow Jones Industrial Average rose 624.16 points, or 1.18%, to close at 53,686.11 on the New York Stock Exchange. The S&P 500 gained 1.06% to 7,747.71, while the tech-heavy Nasdaq climbed 1.40% to 26,584.06.

Comments from Fed officials helped turn the market higher. Waller said he could support leaving rates unchanged at the Federal Open Market Committee's September meeting if August inflation data show further easing in price pressures.

John Williams, president of the Federal Reserve Bank of New York, said the recent surge in U.S. Treasury yields reflected a resilient economy rather than market dysfunction. He added that inflation trends still need to be monitored.

Market pricing for September shifted quickly. CME FedWatch showed the probability of a rate hold rising to 49.5% from 36.8% a day earlier. That left expectations for a hold nearly even with bets on another rate increase, which had recently been the dominant view.

Bond and currency markets also reacted. The yield on the 10-year U.S. Treasury note fell 0.03 percentage point from the previous session to 4.761%, while the policy-sensitive two-year yield dropped 0.05 percentage point to 4.332%. The dollar index slipped about 0.5% to its lowest level since August 26.

The rebound in risk appetite spread to digital assets. Bitcoin rose more than 5% to top $81,000.

Technology stocks were mostly higher. Snowflake surged 16.55% on upbeat annual revenue guidance, while Nvidia rose 1.8% on news of its acquisition of AI model platform Hugging Face. Broadcom fell 2.74% after issuing fourth-quarter revenue guidance that missed market expectations.

Investors are now focused on the U.S. Labor Department's August employment report due on September 4. If the data ease fears of a sharp economic slowdown without signaling overheating, expectations for another rate increase could recede further.