Stocks Rise Sharply as Fed Rate Hike Chances Decline
U.S. stocks closed sharply higher on Thursday, driven by reduced expectations of a Federal Reserve (Fed) interest rate hike in September following dovish comments from Fed Governor Christopher Waller. The S&P 500 rose 1.06%, the Dow Jones Industrial Average gained 1.18%, and the Nasdaq Composite climbed 1.16%. Futures for both major indices also showed gains, reflecting optimism among investors. Waller's remarks indicated that underlying inflation is better than core measures suggest and suggested he would support keeping rates steady if progress toward a 2% target continues in upcoming data releases. This reduced the probability of a rate hike at the Fed’s September meeting to 52%, down from 65%. The comments helped push the yield on 10-year Treasury notes lower by two basis points, easing pressure on equities. The market also received support from positive economic indicators such as stable jobless claims and an unexpectedly strong ISM services index. However, rising crude oil prices due to escalating tensions between the U.S. and Iran added some uncertainty about future inflation risks.
