US stock markets saw significant gains on Thursday, September 3rd, with all three major equity indices rising by over 1%. This positive movement was primarily driven by falling US Treasury yields, particularly in the 12-month and 2-year maturities. The yield on the benchmark US 10-year Treasury note dropped to 4.752% from recent highs, while the 2-year Treasury yield slid to 4.33% from 4.39%. This decline in yields was attributed to statements from Federal Reserve Governor Christopher Waller, who indicated he was inclined to support holding interest rates steady at the central bank's September 16th meeting if inflation continued to show signs of easing. This sentiment significantly reduced market expectations for a rate hike, with the probability of rates remaining unchanged rising to 49.6% according to CME Group’s FedWatch data, from 36.8% the previous day.
The S&P 500 index rose 1.08% to 7,716 points, after bouncing off support at 7,620 earlier in the week. The Dow Jones Industrial Average gained 1.22% or 579 points, reaching 53,534, while the tech-heavy Nasdaq Composite jumped 1.42% to trade around 29,312 points. Gains were broadly led by technology and communication services sectors. Nvidia, for example, rose 1.5% following the announcement of its nearly $13 billion acquisition of open-source AI platform Hugging Face. Other top gainers included Microsoft, Apple, Meta, Salesforce, and Goldman Sachs.
The market's optimism was further fueled by strong earnings reports, particularly from companies benefiting from the AI boom. Snowflake's share price spiked over 20% after beating Wall Street's consensus for its quarterly earnings, with its AI-coding agent Cortex Code cited as a key driver. Conversely, some tech companies like Broadcom and Hewlett Packard Enterprise, despite reporting strong AI-related demand, saw their stocks fall due to revenue outlooks falling short of expectations or supply constraints. Tyson Foods also declined 6.9% after lowering its guidance due to volatile cattle prices.
Despite the positive market reaction to Waller's comments, attention remains focused on upcoming inflation data, specifically the Producer Price Index (PPI) and Consumer Price Index (CPI) for August. Waller himself acknowledged that a rate hike would be considered if inflation comes in hot. Oil prices, however, continued to rise, with WTI reaching $89.50, up half a percentage point, amid escalating US-Iran tensions. This is approximately 5% higher than a month ago and 56% higher than a year ago, adding to existing inflationary pressures.
