U.S. equities moved higher on September 4 as markets reacted to a potentially important shift in Federal Reserve messaging. The S&P 500 rose to 7,702.54, the Dow Jones Industrial Average climbed to 53,460.67, and the Nasdaq Composite reached 26,392.37 as Treasury yields retreated from recent highs.
The catalyst was a dovish signal from Federal Reserve Governor Christopher Waller, who indicated he would be inclined to support holding rates steady at the September 16 meeting if August inflation data continue to show progress toward the Fed’s 2% goal. That comment immediately altered rate expectations and triggered a broad repricing across equities, bonds, gold, and crypto.
The market’s response suggested this was less an artificial intelligence rally than a discount-rate rally. Investors rotated toward long-duration growth assets, while names tied to hardware margins and supply constraints came under pressure despite posting strong operating results.
Key Facts
- The S&P 500 rose 35.94 points, or 0.47%, to 7,702.54, while the Dow gained 398.72 points, or 0.75%, to 53,460.67.
- The 10-year Treasury yield fell to 4.75% after touching 4.818% on September 3, and the 2-year yield dropped to 4.33% from 4.41%.
- Robinhood Markets shares jumped 14.88% to $122.91, while Snowflake surged 21.94% to $372.95 after strong quarterly results.
- Bitcoin climbed 4.28% to $80,311.25 and gold futures rose 2.53% to $4,526.20 as the U.S. dollar weakened below 99 on the dollar index.
- Campbell’s fell 10.66% to $21.25 after cutting its quarterly dividend 36% to $0.25 and issuing weak fiscal 2027 guidance.
Waller’s Fed Pause Signal
The central market story was the drop in yields after Waller’s remarks. In recent sessions, futures markets had raised the implied probability of a 25-basis-point rate increase at the September meeting to roughly 65% to 68%. Waller’s statement reopened the case for a hold, especially if the August consumer price data due around September 10 show continued disinflation.
That shift matters because high-valuation growth stocks are especially sensitive to discount rates. When Treasury yields move lower, the present value of future earnings improves, which can quickly lift software, internet, and crypto-linked equities. That is why names such as Snowflake, Palantir, ServiceNow, and Robinhood outperformed, while some semiconductor and infrastructure stocks lagged even after posting rapid revenue growth.
The move also came with macro confirmation. Initial jobless claims for the latest week rose to 206,000 from 203,000, close to expectations and not strong enough to reignite fears of wage-led inflation. For policymakers, that keeps the labor market in a “low hire, low fire” posture and gives doves room to argue against tightening into an oil-driven inflation shock.
Markets treated one line from Waller as enough to turn a looming September hike from base case into live debate.
Why the rally looked uneven
The Russell 2000 offered an important cautionary signal. Small caps had rallied more than 1% earlier in the session but surrendered nearly all of that gain, rising just 0.04% to 2,954.36 by midday. That suggests investors were not embracing a broad cyclical rebound as much as targeting the assets most leveraged to lower yields.
At the same time, volatility eased, with the VIX falling 1.65% to 14.95. Gold and Bitcoin both rallied sharply, reinforcing the view that investors were responding to monetary repricing rather than a fresh wave of confidence in economic growth.
Software up, AI hardware pressured
Snowflake delivered one of the strongest earnings reactions of the day. The stock surged 21.94% to $372.95 after fiscal second-quarter revenue rose 35% year over year to $1.55 billion, ahead of expectations, while product revenue increased 37% to $1.49 billion. Adjusted earnings per share came in at $0.62 versus expectations of $0.45, and full-year product revenue guidance was raised to $6.07 billion from $5.84 billion.
By contrast, Broadcom fell 6.31% to $344.06 despite reporting fiscal third-quarter revenue of $29.591 billion, up 86% year over year, and AI semiconductor revenue of $16.7 billion, up 221%. The market focused on weaker-than-expected fourth-quarter revenue guidance versus consensus and a lower gross margin outlook as custom AI accelerators and memory products diluted profitability.
That pattern repeated elsewhere. Ciena dropped 11.07% even after record quarterly revenue and earnings, as investors fixated on supply constraints limiting backlog conversion. Hewlett Packard Enterprise fell 6.81% despite a beat, a higher full-year outlook, a new $3.5 billion inferencing award, and an expanded relationship with Oracle. The message was clear: hardware growth was no longer enough if margins or shipment timing raised questions.
Implications for Investors
For investors, the session underlined how strongly markets remain tethered to rate expectations. If August CPI confirms easing inflation, the current rotation into software, internet platforms, and crypto proxies could continue. If inflation reaccelerates, the move may reverse just as quickly, particularly in stocks carrying premium valuations.
Robinhood’s 14.88% rise to $122.91 highlighted the market’s appetite for businesses with both rate sensitivity and company-specific catalysts. The company’s blockchain initiative generated more than $4.3 million in on-chain revenue over 24 hours, and total value locked reached $801 million. That gave investors a fundamental reason to reward the stock beyond simple beta to Bitcoin and lower yields.
Crypto-linked equities broadly participated. Coinbase rose 7.37% to $187.86, Circle advanced 12.35% to $99.58, and MARA Holdings climbed 11.03% to $11.62 as Bitcoin reclaimed $80,000. Still, many of these names remain far below prior highs, indicating that part of the move was short covering and multiple expansion rather than a settled improvement in fundamentals.
On the defensive side, Campbell’s offered a reminder that not all risk is macro. The company reported fiscal fourth-quarter net sales of $2.137 billion, down 8% year over year, while adjusted EPS fell 37% to $0.39. Management cut the dividend to accelerate debt reduction and guided to another year of declining sales and profit. That kind of earnings reset can outweigh broader market support from lower yields.
Investors should now watch three variables closely: the August employment report, the August CPI release, and Treasury market behavior around the September 16 Fed decision. If yields stay off their recent highs, long-duration growth could keep outperforming. If the 10-year pushes back toward 4.9%, the latest rally may prove to be more positioning unwind than durable trend.
The next phase depends less on enthusiasm for AI and more on whether inflation data validate the market’s new confidence in a Fed pause. For now, lower yields are doing most of the work.