Wall Street saw a strong tech-led rally on Thursday, with the Nasdaq Composite climbing 1.5% after Federal Reserve Governor Christopher Waller signaled a potential pause in interest rate hikes. The move came as Treasury yields retreated, easing pressure on high-growth technology shares despite a fresh uptick in services inflation data.
By 3:00 p.m. EDT, the Nasdaq Composite was up 1.50% at 26,612.31, outperforming the other major indexes. The S&P 500 rose 1.11% to 7,751.31, while the Dow Jones Industrial Average gained 1.15%. The Russell 2000 lagged, adding just 0.40%, underscoring the session's focus on large-cap technology names.
The rally was driven by robust gains in key mega-cap stocks. Microsoft (MSFT) advanced 3.00%, Meta Platforms (META) surged 3.53%, NVIDIA (NVDA) climbed 2.21%, and Apple (AAPL) added 0.68%. These heavyweights provided the bulk of the Nasdaq's upward momentum.
The catalyst for the move was a comment from Fed Governor Christopher Waller, who said he would be willing to hold the policy rate at current levels if inflation continues to make progress toward the 2% target. However, he also noted he would support a hike if price pressures accelerate. The remarks were interpreted as a dovish signal, fueling hopes that the central bank may soon end its tightening cycle.
Treasury yields slipped 3.4 basis points to 4.762% on the 10-year note, despite a higher-than-expected ISM services prices index. The index rose to 72.6, its highest level since August 2022, suggesting that price pressures in the services sector remain elevated. The ISM services PMI also improved to 55.4 in August from 54.1, indicating continued expansion, while the employment sub-index stayed in contraction territory at 47.8.
Sector performance was broadly positive, with eight of 11 S&P 500 sector funds advancing. Consumer discretionary led gains with a 1.69% rise, followed by financials (1.41%) and technology (1.30%). On the downside, materials fell 0.47%, energy dropped 0.38%, and consumer staples slipped 0.15%.
Investors also digested fresh economic data. Initial jobless claims rose by 2,000 to 206,000, with the four-week moving average at 207,250. The U.S. trade deficit widened 24.4% in July to $88.6 billion, reflecting stronger domestic demand and a slower global recovery.
Trading volumes were steady, with SPY seeing 26.1 million shares, QQQ 22.5 million, and IWM 12.3 million by 3:00 p.m., each about 72% of their 20-day average.
Looking ahead, all eyes are on Friday's August jobs report, due at 8:30 a.m. EDT. The payrolls and wage data could determine whether the recent decline in yields continues or reverses, potentially impacting tech's leadership. Additionally, oil prices hovered near $91.60 per barrel, up 0.65%, as geopolitical tensions in the Middle East persist, posing a risk of renewed inflation pressures.
