Stocks Rally, Yields Retreat after Waller Signals a September Hold
Wall Street experienced a rally on Thursday as Federal Reserve Governor Christopher Waller signaled that the central bank would hold off on raising interest rates in September. Waller's statement at a Reuters event, paraphrasing John Lennon, encouraged bond traders to give disinflation a chance, prompting a significant shift in market sentiment.
The S&P 500 jumped over 1%, the Nasdaq climbed 1.4%, and the Dow gained 640 points, marking its best session since August 4. The 10-year Treasury yield retreated to around 4.75% from a previous spike. Market participants had anticipated a rate hike at Waller's upcoming meeting, with the Fed's benchmark overnight rate currently ranging between 3.50% and 3.75%.
The prospect of lower yields made government bonds appear more attractive compared to stocks, leading to a surge in equity prices. Even though Waller's signal presented a 50.4% chance of a rate hike, it represented a substantial decrease from the previous 63.2%.
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