Dow jumps 580 points, Treasury yields and oil prices ease as Fed governor signals no rate hike
Stocks jumped Thursday while Treasury yields and oil prices dipped after a Fed governor signaled he wants to keep interest rates flat – lowering the odds of a rate hike this month.The Dow Jones Industrial rose 580 points, or 1.1%, by about 1:20 p.m.ET — on track for its best day in a month — while the S&P 500 and Nasdaq increased 1% and 1.3%, respectively.The US 10-year Treasury yield – which had hit its highest level in three years the day prior – dropped to 4.756%. Investors dumped government bonds over the past few weeks, convinced the Fed might hike interest rates at its Sept.
16 meeting.The rapid run-up in Treasury yields was threatening to drive borrowing costs higher for Americans already struggling to afford homes and new cars.But on Thursday, Fed Governor Christopher Waller said he is leaning toward keeping interest rates steady – conflicting with Fed Chair Kevin Warsh’s hawkish speech at the central bank’s annual Jackson Hole conference last week.Waller said the effects of President Trump’s tariffs have been muted and higher energy prices amid the Iran war have not bled into much of the economy.He noted that inflation is still “meaningfully above” the Fed’s 2% goal, but said recent trends “suggest we are finally seeing some 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 in an interview.“I’m going to paraphrase John Lennon here: Give disinflation a chance.
We can wait one meeting,” he added.“What’s the cost of waiting one meeting? Hiking 25 basis points, one meeting right now, is not going to bring the CPI down to 2%.”Brent crude oil futures remained stubbornly above $95 a barrel Thursday – though they dropped from a brief high of $97 earlier in the day, which was reached after Iran fired missiles at Kuwait, a US ally in the Persian Gulf region.Nati...