NEW YORK – Zscaler (NASDAQ:ZS) saw its intraday surge evaporate during Thursday's regular session, while the Nasdaq Composite held onto a solid 1.4% advance, as investors digested shifting Federal Reserve rate expectations and a flurry of earnings-driven moves.
The Nasdaq ended the day up 1.40% at 26,584.06, outperforming the S&P 500, which gained 1.06% to close at 7,747.71. The Dow Jones Industrial Average climbed 1.18% to 53,686.11. After-hours trading through 17:00 EDT saw minimal movement in major index ETFs, with SPY and QQQ each slipping less than 0.03%.
Fed Rate Expectations Shift
The equity rally was fueled by a notable shift in rate expectations. Following comments from Federal Reserve Governor Christopher Waller, the probability of a September rate hike dropped to 50.4%, down from 63.2% the previous day. Waller indicated that further disinflation would make him inclined to hold rates steady, though strong August inflation data could still prompt an increase.
This dovish tilt pushed the two-year Treasury yield down to 4.34% from 4.39%, while the 10-year yield eased to 4.77% from 4.79%. Lower yields typically support growth-oriented tech stocks, which led the broader market higher.
Tech Leaders and Notable Movers
Major technology names powered the advance. Microsoft (NASDAQ:MSFT) rose 2.7%, Apple (NASDAQ:AAPL) added 1.0%, and Meta Platforms (NASDAQ:META) gained 3.0%. NVIDIA (NASDAQ:NVDA) climbed 1.8% following its $13 billion investment in Hugging Face, a move that underscores the AI arms race.
Earnings results created a two-sided tape. Snowflake (NYSE:SNOW) surged 16.6% after strong quarterly numbers, while Broadcom (NASDAQ:AVGO) slipped 2.7%. Hewlett Packard Enterprise (NYSE:HPE) advanced 5.0%, but Tyson Foods (NYSE:TSN) fell 7.3% and Victoria's Secret & Co. (NYSE:VSCO) tumbled 13.2%.
Zscaler's Volatile Session
Zscaler served as an early indicator of market volatility. The cybersecurity firm jumped as much as 12% at the open, reaching $199.20, but gave back nearly all of those gains by the close. The stock finished the regular session at $177.80, up 2.94%, and was trading around $182.00 in after-hours.
The company's quarterly revenue rose 25% year-over-year to $898.2 million, with annual recurring revenue (ARR) climbing to $3.771 billion. However, its free-cash-flow margin contracted sharply to 7% from 24% a year earlier, reflecting increased capital expenditures. This margin compression likely tempered investor enthusiasm.
Oil and Commodities
Oil prices were mixed amid ongoing Middle East supply concerns. U.S. crude closed up 0.3% at $91.30 per barrel, while Brent eased 0.1% to $95.52. Elevated crude prices continue to fuel inflation worries, which could influence the Fed's policy path.
Looking Ahead
Market participants now turn their attention to the August employment report due Friday, followed by inflation data on September 11. The Federal Open Market Committee is scheduled to meet September 15–16. A strong jobs or inflation reading could revive rate-hike expectations, potentially pressuring equities.
After-hours liquidity remains thin, which can exaggerate price moves in ETFs and individual stocks. Investors should exercise caution when interpreting post-close activity.
