The S&P 500 Index ($SPX) (SPY) is up by +0.49% today, the Dow Jones Industrial Average ($DOWI) (DIA) is up by +0.76%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up by +0.54%. E-mini S&P futures (ESU26) are up +0.50%, and September E-mini Nasdaq futures (NQU26) are up +0.60%.
Stocks are climbing today as dovish comments from Fed Governor Waller knocked bond yields lower and reduced the chance of a Fed rate hike later this month. The 10-year T-note yield is down -3 bp to 4.76% after Mr. Waller said underlying inflation is better than core numbers suggest and he will support keeping interest rates steady if next week’s inflation news shows “continued progress toward our 2% goal.” Mr. Waller’s comments reduced the chance of a Fed rate hike at the Sep 15-16 FOMC meeting to 50% from 65% before he spoke.
Stocks also found support from today’s US economic news, including weekly jobless claims that showed a stable labor market, and the Aug ISM services index that showed service activity unexpectedly expanded at the strongest pace in 6 months.
Stocks are being undercut by weakness in some technology stocks. Broadcom is down more than -6%, weighing on chipmakers, after reporting Q3 earnings results that were seen as underwhelming. Also, Hewlett Packard Enterprise fell more than -7% after reporting quarterly sales that fell short of high expectations.
In addition, rising crude oil prices have bolstered concerns that the Fed may have to keep raising interest rates to stifle inflation. WTI crude oil climbed to a new 6-week high today as the US-Iran conflict continues with no end in sight.
US weekly initial unemployment claims rose +2,000 to 206,000, close to expectations of 205,000, showing a stable labor market.
US Q2 nonfarm productivity was left unrevised at +1.4%, but Q2 unit labor costs were revised lower to +1.2% from the previously reported +1.3%.
The US Aug ISM services index unexpectedly rose +1.3 to a 6-month high of 55.4, stronger than expectations of no change at 54.1. The Aug ISM price paid sub-index unexpectedly rose +2.3 to a 4-year high of 72.6, stronger than expectations of a decline to 70.0.
Fed Governor Christopher Waller said underlying inflation is better than core numbers suggest and his decision on interest rates at this month's FOMC meeting will be "heavily influenced" by August inflation data due next week. He added, "If there is continued progress toward our 2% goal, I am willing to support holding the policy rate at its current level. However, if inflation comes in hot, I will consider a rate hike."
Oct WTI crude oil prices (CLV26) are up more than +1% today at a fresh 6-week high on signs of tighter global oil supplies. Data compiled by Bloomberg, Kpler and Vortexa showed that Saudi Arabia's Aug crude exports dropped to about 3 million bpd, the lowest amount in 9 years. Also, hostilities have escalated this week between the US and Iran, dampening hopes that the Strait of Hormuz will be fully reopened anytime soon. The US carried out several rounds of strikes against Iran this week, targeting radar systems and mine-laying capabilities along Iran's southern coast. Iran retaliated with drone and missile attacks on US bases across the Middle East. On the bearish side for crude oil prices, CNN reported that the US military escorted 40 vessels carrying 18 million bbl of oil through the Strait of Hormuz on Tuesday.
Q2 earnings results are a bullish factor for stocks. The S&P 500 is tracking for earnings growth of almost +32% in Q2, well above projections of +23%, and nearly four times the average earnings growth rate outside of the Covid period since Q4 of 2013, according to Bloomberg Intelligence. AI spending is expected to account for most of earnings, with AI infrastructure stocks set to contribute nearly 60% of the S&P 500's earnings-per-share growth in Q2. So far, earnings results have been positive, with 86% of the 493 S&P 500 companies that have reported Q2 earnings beating estimates, according to Bloomberg data.
The markets are discounting a 50% chance of a +25 bp rate hike at the next FOMC meeting on September 15-16.
Overseas stock markets are mixed today. The Euro Stoxx 50 is down -0.09%. China's Shanghai Composite closed up +0.02%. Japan's Nikkei-225 Stock Average fell to a 4-week low and closed down -0.17%.
Interest Rates
December 10-year T-notes (ZNZ6) are up by +7 ticks today. The 10-year T-note yield is down -2.4 bp to 4.754%. T-notes are climbing today on dovish comments from Fed Governor Waller, who said underlying inflation is better than core numbers suggest. Mr. Waller’s comments caused the markets to reduce the chances for a Fed rate hike later this month to 48% from 65% before he spoke. T-notes added to their gains after Q2 unit labor costs were revised lower.
Gains in T-notes are limited after WTI crude oil climbed to a 6-week high, boosting inflation expectations and hawkish for Fed policy. The 10-year breakeven inflation rate rose to a 2-week high of 2.362% today. Also, the unexpected increase in the Aug ISM price paid sub-index to a 4-year high signals price pressures in the service sector, a hawkish factor for Fed policy.
European government bond yields are moving lower today. The 10-year German bund yield is down -2.8 bp to 3.348%. The 10-year UK gilt yield is down -7.0 bp to 5.160%.
Eurozone July PPI rose +1.6% m/m and +5.8% y/y, stronger than expectations of +1.3% m/m and +5.5% y/y.
The Eurozone Aug S&P composite PMI was revised downward by -0.1 to 53.0 from the previously reported 52.1.
Markets are discounting a 99% chance of a +25 bp ECB rate hike at its next policy meeting on September 10.
US Stock Movers
The Magnificent Seven technology stocks are climbing today, supporting gains in the overall market. Tesla (TSLA) is up more than +6%, and Meta Platforms (META) and Microsoft (MSFT) are up more than +2%. Also, Alphabet (GOOGL) is up more than +1%, Apple (AAPL) is up +0.92%, Amazon.com (AMZN) is up +0.65%, and Nvidia (NVDA) is up more than +0.55%.
Software stocks are rallying today, a positive factor for the broader market. Palantir Technologies (PLTR) is up more than +7%, and ServiceNow (NOW), Atlassian Corp (TEAM), Oracle (ORCL), and Thomson Reuters (TRI) are up more than +4%. Also, Datadog (DDOG) and Salesforce (CRM) are up more than +2%, and Adobe Systems (ADBE), Intuit (INTU), and Workday (WDAY) are up more than +1%.
Cryptocurrency-exposed stocks are moving higher today, with Bitcoin (^BTCUSD) up more than +4%. Robinhood Markets (HOOD) is up more than +15% to lead gainers in the S&P 500, and Circle Internet Group (CRCL) is up more than +13%. Also, Strategy (MSTR) is up more than +12% to lead gainers in the Nasdaq 100, and Galaxy Digital Holdings (GLXY) and MARA Holdings (MARA) are up more than +11%. In addition, Coinbase Global (COIN) is up more than +9%. In addition, Riot Platforms (RIOT) is up more than +8%, and Iren Ltd (IREN) is up more than +2%.
Snowflake (SNOW) is up more than +20% after reporting Q2 revenue of $1.55 billion, above the consensus of $1.49 billion, and forecasting Q3 revenue of $1.588 billion to $1.593 billion, higher than the consensus of $1.510 billion.
Netskope (NTSK) is up more than +3% after reporting Q2 annual recurring revenue of $899 million, better than the consensus of $893.3 million.
Copart (CPRT) is up more than +3% after JPMorgan Chase upgraded the stock to overweight from neutral with a price target of $40.
Victoria’s Secret & Co (VSXY) is down more than -12% after reporting Q2 net sales of $1.61 billion, below the consensus of $1.62 billion.
Campbell’s Company (CPB) is down more than -11% after reporting Q4 net sales of $2.14 billion, weaker than the consensus of $2.15 billion.
Tyson Foods (TSN) is down more than -7% after cutting its full-year sales forecast to +1.5% to +2.0% from a previous forecast of +2.5% to +3.5%
Broadcom (AVGO) is down more than -6% after forecasting Q4 revenue of $34.80 billion, below the consensus of $35.05 billion.
Hewlett Packard Enterprise Co (HPE) is down more than -6% despite reporting stronger-than-expected Q3 revenue after CEO Neri said sales are being held back by a continued lack of components.
Earnings Reports (9/3/2026)
Campbell's Company/The (CPB), Ciena Corp (CIEN), DocuSign Inc (DOCU), Guidewire Software Inc (GWRE), Lululemon Athletica Inc (LULU), Planet Labs PBC (PL), Samsara Inc (IOT), Toro Co/The (TTC), UiPath Inc (PATH), Zscaler Inc (ZS).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.