Wall St climbs after Fed governor says he could support rate hold

NEW YORK: Wall Street’s main indexes rose on Thursday after Federal Reserve Governor Christopher Waller said he could support holding rates steady this month if data confirms price pressures are cooling off.

The comments prompted traders to lower bets on a hike, and could dispel the gloom in markets following the latest military exchanges between the US and Iran.

But borrowing costs may need to rise if inflation data shows price pressures persist, he said. Traders still expect a nearly 50 percent chance of a hike this month, according to the CME FedWatch tool.

“Even if domestic inflation data improves, a sustained rise in oil prices could keep inflation concerns alive and make it harder for the Fed to remain on the sidelines,” said Jeff DerGurahian, loanDepot’s chief investment officer.

Brent crude futures rose 0.49 percent on Thursday — their fourth consecutive day of gains.

Separately, data released on Thursday showed US services sector activity picked up in August.

Investors hungry for positive catalysts are now eyeing Friday’s jobs data, but some have cautioned against placing too much emphasis on the report as Federal Reserve Chair Kevin Warsh has indicated that controlling inflation remains his top priority.

In Thursday’s batch of data, initial claims for state unemployment benefits rose by 2,000 to a seasonally adjusted 206,000 in the week ended August 29, broadly in line with economists’ expectations.

At 11:25 a.m. ET, the Dow Jones Industrial Average rose 612.96 points, or 1.15 percent, to 53,673.94, the S&P 500 gained 70.70 points, or 0.93 percent, to 7,737.70 and the Nasdaq Composite gained 323.62 points, or 1.23 percent, to 26,541.45.

Communication services stocks led gains among the S&P 500’s 11 sectors, rising about 1.76 percent, while healthcare and materials slipped.

Broadcom dropped 4.9 percent to a five-month low after its fourth-quarter revenue forecast fell short of Wall Street’s lofty expectations, underscoring that the firms at the center of the AI buildout have a high bar to clear.

The weakness spilled over to chipmakers, with the Philadelphia Semiconductor index down more than 1 percent.