Dow Posts Best Day in a Month
US stocks jumped Thursday, with the Dow Jones Industrial Average climbing 624 points, or 1.2%, marking its strongest session in about a month.
The S&P 500 and Nasdaq Composite also gained more than 1%, as investors responded positively to comments from Federal Reserve Governor Christopher Waller suggesting that he favors keeping interest rates steady at the central bank’s upcoming meeting.
The comments helped ease concerns that the Fed could raise rates at its September 16 meeting.
Treasury Yields Pull Back
The rally in stocks came as Treasury yields moved lower.
The 10-year US Treasury yield fell to 4.756%, after reaching its highest level in three years the previous day.
Investors had recently been selling government bonds amid fears that persistent inflation and higher energy prices could push the Fed toward another rate increase.
Higher Treasury yields can also raise borrowing costs for consumers, potentially making mortgages, auto loans and other forms of credit more expensive.
Waller Signals Patience
Fed Governor Christopher Waller said he is leaning toward keeping interest rates at their current level.
He argued that the impact of President Donald Trump’s tariffs on inflation has so far been limited, while higher energy prices linked to the Iran conflict have not significantly spread through the broader economy.
Although inflation remains “meaningfully above” the Fed’s 2% target, Waller said recent data suggest the economy is beginning to show signs of disinflation.
“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,” Waller told Reuters.
Waller also urged policymakers to give disinflation more time, arguing that waiting one additional meeting could be preferable to raising rates by 25 basis points immediately.
Oil Prices Remain Elevated
Oil prices also eased during Thursday’s session but remained historically high.
Brent crude futures stayed above $95 a barrel, after briefly reaching about $97 following reports that Iran had fired missiles at Kuwait, a US ally in the Persian Gulf.
The elevated oil prices continue to add pressure to American consumers.
Gasoline Prices Hit $4.14
The national average price for gasoline climbed to $4.14 per gallon, according to AAA.
Prices have remained above the $4 mark for weeks, substantially higher than the $2.98 pre-war average cited in the report.
Higher fuel costs are adding another burden for consumers already dealing with elevated prices for vehicles, insurance and other everyday expenses.
Global Oil Supply Remains a Concern
Despite the recent jump in crude prices, Goldman Sachs analysts said Persian Gulf oil exports had recovered to roughly two-thirds of pre-war levels.
However, it remains unclear how renewed tensions in the Middle East could affect those exports.
Meanwhile, US oil inventories remain under pressure. The Strategic Petroleum Reserve has fallen below 300 million barrels, its lowest level in more than four decades.
Markets Watch the Fed
Thursday’s market rally shows how sensitive investors remain to changes in expectations for monetary policy.
With inflation still above the Fed’s target and energy prices elevated, policymakers face a difficult balancing act between controlling inflation and avoiding unnecessary pressure on economic growth.
For now, Waller’s comments have given investors fresh reason to believe the Fed could hold rates steady rather than deliver another hike in September.
