The Fed's Statement That Turned Wall Street Around: The True Meaning of the Rally

US equity markets rebounded sharply on September 3 (local time) thanks to dovish signals from the Federal Reserve. The Dow rose 1.2% to 53,686.11, the S&P 500 gained 1.1% to 7,747.71, and the Nasdaq jumped 1.4%, recouping a large portion of recent losses.

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What moved the markets was Fed Governor Christopher Waller’s remark that “if inflation continues on its current path, I could support holding the policy rate steady at the September meeting.” After this comment, the 10-year U.S. Treasury yield fell from 4.79% to 4.77%, dampening rate‐hike expectations. On the same day, initial jobless claims totaled 206,000 and the ISM Services Index came in at 55.4—data that reinforced the view that growth is slowing moderately but the economic backdrop remains solid.

In the face of a more accommodative rate outlook, big‐tech and AI‐related stocks led the rally. Major semiconductor names, including NVIDIA, showed strength, and Bitcoin topped $80,000 again—helping crypto‐related shares such as Coinbase to post double‐digit gains. However, with service‐sector price subindices soaring to their highest levels since 2022, renewed inflation concerns could put this rally to the test.

Against the backdrop of a weaker dollar, precious metals like gold and silver rose by around 2%, while Brent crude held near $95 per barrel. Even as Iran carried out missile and drone attacks and regional tensions in the Middle East persisted, the muted spike in oil prices suggested that U.S. investors were more focused on the Fed’s next decision and upcoming inflation readings than on geopolitical risk.