Wall Street rallies as Fed’s Waller eases rate hike fears

On September 3, 2026, Wall Street experienced a rally as investors reduced their concerns about potential interest rate hikes. The Federal Reserve's Governor, Christopher Waller, signaled his support for holding the Fed funds target rate steady if inflationary pressures began to ease. Following Waller's remarks, financial markets adjusted their expectations for rate increases at the Fed's upcoming September meeting, lowering the probability from 63.2% to 50.4%.

This shift in expectation led to a decrease in the benchmark U.S. Treasury yield, which had previously hit its highest level since November 2023.

Bill Northey, a senior investment director at U.S. Bank Wealth Management, noted that Waller's comments contributed to a broad lift across market indices. However, some differentiation in performance could be observed within specific sectors, such as semiconductors and software. Economic reports on Thursday indicated generally positive trends, with low jobless claims and an acceleration in the service sector.

Conversely, service input prices reached their highest level since October 2022, and the international trade gap widened by 24.4%.

Expected figures for the upcoming week included an employment report from the Labor Department on Friday, which is anticipated to show a job addition of 56,000, keeping the unemployment rate at 4.1%. The Dow Jones Industrial Average increased by 645.71 points (1.22%) to 53,707.66, while the S&P 500 gained 88.54 points (1.15%) to 7,755.14, and the Nasdaq Composite surged by 410.31 points (1.57%) to 26,628.14.

Among the 11 major sectors in the S&P 500, consumer discretionary emerged as the top performer, whereas materials and energy stocks experienced slight declines. Additionally, Nvidia announced a $12.9 billion acquisition of developer platform Hugging Face, propelling its shares up by 2.6%. Chipmaker Broadcom, on the other hand, saw a drop of 3.7% following a weaker-than-expected fourth-quarter revenue forecast.

Notable gains were also seen in the software sector, with Snowflake rising 20.2%, ServiceNow up 6.4%, Salesforce increasing by 3.4%, and Adobe advancing by 2.3%. The S&P Software & Services index experienced a 3.6% increase. As for cryptocurrency-linked stocks, bitcoin rebounded from two consecutive losing sessions, leading to a surge in related stocks, including Strategy (15.0%), Coinbase Global (10.3%), and Robinhood Markets (16.1%).

Advancing issues significantly outnumbered declining ones on both the NYSE (2.25-to-1) and the Nasdaq (1.82-to-1), with notable 52-week highs (14 on the S&P 500, 59 on the Nasdaq) and new lows (8 on the S&P 500, 97 on the Nasdaq).