Stocks climbed and global bond yields retreated after Federal Reserve Governor Christopher Waller said he would support holding interest rates steady if August inflation data supports it.
The rally was broad, with all but three S&P 500 sectors in the green. Financials and consumer-discretionary stocks led gains, ending the session up more than 1.5%. Every Magnificent Seven company ended higher. Robinhood, Coinbase, Palantir and ServiceNow were among the S&P 500's biggest winners.
Major indexes opened higher after Waller suggested he would support holding rates steady at the central bank's meeting in two weeks if inflation data continue their recent progress. "Recent data suggest we are finally seeing some signs of disinflation," Waller said at a Reuters event. "If this continues in the data due over the next two weeks, I would be inclined to support holding the target for the federal-funds rate at its current setting."
The comments relieved some pressure on the bond market, where a recent climb in yields-which rise when prices fall-had rattled investors worldwide. Treasury yields retreated, with the 10-year yield settling at 4.761%, down from 2026 highs near 4.8% hit in recent days. The odds of a Fed rate increase this month are now a coin flip, according to CME FedWatch, down from a 70% likelihood yesterday.
The Dow Jones Industrial Average rose around 624 points, or 1.2%, to 53686. The S&P 500 added 1.1%, while the Nasdaq composite climbed 1.4%.
"I think it's a question of how much time can the Fed buy itself. Can they credibly not raise rates in September through the year-end?" said Tim Holland, chief investment officer at Orion. "I think they're worried if they raise rates they will do real damage to the market and the economy for factors that are important, but factors that could also maybe go away in a weekend."
Nvidia shares rose 1.8% after the world's only $5 trillion company agreed to buy Hugging Face in a deal worth $12.93 billion, a value matching the decimal representation of the unicode ID for the "Hugging Face" emoji.
Nvidia is ramping up its efforts to develop open-weight models to counter the dominance of Chinese models and their threat to U.S. artificial-intelligence companies. Hugging Face, which was recently hacked by a rogue OpenAI model, is a platform for users to collaborate on machine-learning projects.
"Obviously, there are all these questions about the sustainability of the AI capex cycle, the build out, all of it," Holland said. "But that just speaks to, at least in Nvidia's case, optimism, forward thinking, being willing to cut a very big check for a company that hasn't been around all that long."
Tesla rose 5.4% on high hopes for its robotaxi launch Thursday night. Meta climbed 3% after it released a new AI model.
Brent crude, the global gauge, ended a three-day winning streak, edging down 0.1% to $95.52 a barrel. U.S. crude futures added 0.3% to $91.30.
Meanwhile, the yen extended its rally against the dollar, bringing its two-day gain to about 3%. Hawkish comments from a Bank of Japan board member yesterday have raised the possibility of bigger or more frequent interest-rate hikes, which would strengthen the yen.
Comments