U.S. Stock Market Rises Across the Board...Interest Rate Fears Subside

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The U.S. stock market surged as concerns about the Federal Reserve's (Fed) interest rate hike eased, with the Nasdaq jumping 1.4% and the Dow climbing 623 points.

According to Barron's on September 3 (local time), the Nasdaq Composite Index rose 1.4%. The S&P 500 Index increased by 1.1%, and the Dow Jones Industrial Average by 1.2%. The Dow's gain amounted to 623 points. The prospect of a September rate hike receded after Federal Reserve Governor Christopher Waller left open the possibility of freezing interest rates.

The probability of a September rate hike, as compiled by CME FedWatch, dropped from 63% the previous day to 48%. Earlier, expectations for a rate hike had risen after former Fed Chairman Kevin Warsh delivered a hawkish message at the Jackson Hole speech, but Waller's remarks lowered market cautiousness.

The bond market also supported the stock rally. The U.S. 10-year Treasury yield fell to 4.75%. Previously, the 10-year yield had risen to 4.818%, marking its highest level in about three years. John Williams, President of the Federal Reserve Bank of New York, also stated that there is no need to rush to raise interest rates in response to persistent inflation.

Large tech stocks also rose across the board. Tesla (TSLA) surged 7%, Meta (META) rose 3.5%, and Microsoft (MSFT) climbed 3.1%. Apple (AAPL), Amazon (AMZN), Nvidia (NVDA), and Alphabet (GOOGL) also each gained more than 1%. The Roundhill Magnificent Seven ETF, which holds the Magnificent Seven stocks, rose 2.7% to $70.58.

Market attention shifted to the U.S. August employment report to be released the next day. Eric Diton of The Wealth Alliance explained that the market is hoping for employment figures that are weak enough to alleviate the Fed's burden but not so bad as to heighten recession concerns. Tom Essaye of Sevens Report pointed out that stronger-than-expected employment figures could push Treasury yields up again, putting pressure on the stock market.

[Article Summary]

-As concerns about the Fed's interest rate hike eased, the Nasdaq rose 1.4%, the S&P 500 by 1.1%, and the Dow by 1.2%.

-The probability of a September rate hike dropped from 63% the previous day to 48%, and the U.S. 10-year Treasury yield fell to 4.75%.

-Tesla surged 7%, and the market focused on the U.S. August employment report to be released the next day.

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