Fed Rate Hike Expectations Ease, S&P 500 and Dow Jones Both Rise
nashnova research
U.S. stocks rallied on September 3, with the Dow up roughly 335 points; the catalyst was the 10-year Treasury yield pulling back to 4.75% as markets trimmed the odds of a September Fed hike from 63% to 50%.
What drove the rally?
The S&P 500 gained 0.5%, the Nasdaq 0.5%, and the Dow 0.6% — about 335 points.
The trigger: the 10-year Treasury yield eased to 4.75%, retreating from recent highs.
This means → borrowing-cost expectations loosened, and equities responded immediately.
Why did rate-hike odds cool?
CME FedWatch data show September hike probability fell from 63% to 50%; Treasury yields declined for a second straight session.
David Rosenberg of Rosenberg Research said: "The bond market is getting a reprieve."
He pointed to two catalysts: dovish remarks from New York Fed President John Williams + Trump's comments on the Iran conflict — both eased upward pressure on yields.
In plain terms = the Fed official sounded less hawkish, and geopolitical tension pushed money into Treasuries for safety — yields naturally drifted lower.
What did the inflation and trade data signal?
Crude oil futures rose roughly 1%, with Brent touching $96 a barrel — inflation pressure has not faded.
The July trade deficit widened to $88.6 billion but came in below expectations; weekly initial jobless claims held roughly flat at 206,000.
This means → the data were neither weak enough to force the Fed's hand nor strong enough to lock in a hike — the market gets a brief window to breathe.
Can the rebound last?
The structural forces that pushed yields higher — oil prices, inflation expectations — have not disappeared.
The next checkpoint: Friday's August nonfarm payrolls report.
In plain terms = today's rally traded on a shift in expectations, not a fundamental reversal; a blowout jobs number could snap hike odds right back up.
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