S&P 500 closes at 7,747.71 on September 3, 2026 — one Fed speech cut hike odds from 63% to 50%
US stocks rallied on September 3, 2026 and the three main indices each rose more than 1 percent. The Dow Jones Industrial Average closed at 53,686.11, up 624.16 points or 1.18 percent, the Nasdaq Composite at 26,584.06, up 366.23 points or 1.40 percent, and the S&P 500 at 7,747.71, up 81.11 points or 1.06 percent. The cause was a single speech. Federal Reserve Governor Christopher Waller said he is willing to support holding the policy rate where it is provided inflation keeps moving toward the 2 percent target, and named the August consumer price index, due on September 11, as the input that would heavily influence his vote. Futures-implied odds of a rate hike at the September meeting fell from 63.2 percent to 50.4 percent. The two-year Treasury yield fell as much as seven basis points to 4.30 percent and the ten-year eased to about 4.75 percent, one session after reaching 4.818 percent, the highest level since November 2023
The three lines
- Close — S&P 500 7,747.71 (+1.06%), Dow 53,686.11 (+1.18%), Nasdaq 26,584.06 (+1.40%)
- Cause — Waller signalled he could back a hold; hike odds fell from 63.2% to 50.4%
- Rates — two-year yield to 4.30%, ten-year to about 4.75%. The decider is August CPI on September 11
Key questions
- What did the S&P 500 close at on September 3, 2026?
- **7,747.71, up 81.11 points or 1.06 percent.** The Dow closed at **53,686.11**, up 624.16 points or 1.18 percent, and the Nasdaq Composite at **26,584.06**, up 366.23 points or 1.40 percent. The prior session's closes were 7,666.60, 53,061.95 and 26,217.83 respectively. This was the first day since late August that all three indices gained more than 1 percent, and the reason it registers is the sequence it interrupted. **What had been pressing US equities since late August was not earnings but rates** — renewed US-Iran fighting lifted crude, higher crude lifted inflation expectations, and higher inflation expectations raised the probability that the Fed would **raise** rates in September. That chain drove the 10-year Treasury yield to 4.818 percent intraday on September 2. September 3 broke the last link in it.
- What exactly did Waller say?
- **He put a condition on paper under which no hike is needed.** Governor Christopher Waller said that **if there is continued progress toward the 2 percent goal, he is willing to support holding the policy rate at its current level**, and that his decision will be **heavily influenced by August inflation data**. Two things made the market move. First, recent Fed commentary had leaned the other way. After Kevin Warsh's Jackson Hole address on August 28, September hike odds jumped from the 30s to 56 percent, and had reached 63.2 percent by September 2. Waller's was the first senior voice to lean the other way. Second, **he attached a condition rather than a promise** — he also said a hot inflation print would make him consider a hike. That is why the implied probability did not collapse toward zero but stopped at **50.4 percent**, almost exactly a coin flip.
- Where does the 50 percent figure come from?
- **From futures prices, not from a survey or a vote.** CME's FedWatch tool converts fed funds futures prices into implied probabilities for each meeting outcome. Because traders are committing capital rather than answering a questionnaire, it behaves differently from an opinion poll — it is a price, and it updates continuously. The move on the day was **63.2 percent to 50.4 percent**, 12.8 percentage points in a session. The Treasury market moved first and more precisely: the **two-year yield fell as much as seven basis points to 4.30 percent** while the **ten-year eased to around 4.75 percent**. That the front end moved more than the long end is informative. The two-year mostly prices the path of policy over the next couple of years; the ten-year carries longer-run growth and inflation expectations. **The repricing was about the Fed's next few meetings, not about the inflation outlook itself.** And the decision now hangs on one date: the August consumer price index at 8:30 am Eastern on September 11.
All three major US indices rose more than 1 percent on September 3, 2026. The S&P 500 closed at 7,747.71 (+81.11, +1.06%), the Dow at 53,686.11 (+624.16, +1.18%), and the Nasdaq Composite at 26,584.06 (+366.23, +1.40%).
No earnings report and no economic release caused it. One Federal Reserve governor's remarks did.
1. The chain that had been pressing the market
To understand the rebound, look at the ten days before it. What had been weighing on US equities was a sequence with a specific order:
US-Iran fighting → higher crude → higher inflation expectations → higher odds of a Fed hike → higher Treasury yields → lower equities.
Kevin Warsh's first Jackson Hole address as Fed chair on August 28 pushed implied odds of a September hike from the 30s to 56 percent. Renewed American strikes on Iran and Iranian retaliation across the Gulf lifted Brent into the mid-90s. On September 2 the US 10-year Treasury yield touched 4.818 percent, its highest since November 2023, and implied hike odds stood at 63.2 percent.
The unusual feature of this regime is worth stating plainly. The market is not arguing about how fast the Fed will cut. It is arguing about whether the Fed will raise.
2. The condition Waller attached
Governor Christopher Waller's remarks reduce to two sentences.
- If there is continued progress toward the 2 percent goal, he is willing to support holding the policy rate at its current level.
- His judgement will be heavily influenced by the August consumer price index.
It was the first senior Fed voice in this cycle to lean toward a hold. Markets repriced immediately.
| Item | September 2 | September 3 |
|---|---|---|
| S&P 500 | 7,666.60 | 7,747.71 (+1.06%) |
| Dow | 53,061.95 | 53,686.11 (+1.18%) |
| Nasdaq Composite | 26,217.83 | 26,584.06 (+1.40%) |
| Implied September hike odds | 63.2% | 50.4% |
| 10-year Treasury yield | 4.79% (4.818% intraday) | ~4.75% |
| 2-year Treasury yield | ~4.37% | 4.30% (intraday low) |
The front end moved more than the long end, and that distinction carries information. The two-year yield mostly reflects the expected path of policy over the next couple of years; the ten-year carries longer-run growth and inflation expectations. Concentrating the move in the two-year means the market re-scored the Fed's next few meetings and left its inflation outlook broadly intact.
The other detail is where the probability stopped. Not near zero — at 50.4 percent. Waller made a hold conditional and said explicitly that a hot print would put a hike back on the table. The market took him literally and priced a coin flip.
3. Beneath the index, dispersion
The indices moved together; individual names did not.
- Snowflake rose more than 20 percent after beating on earnings and revenue with an optimistic outlook.
- Broadcom fell 4 to 6 percent. Its fiscal third-quarter results beat estimates and AI semiconductor revenue grew 221 percent year on year, but fourth-quarter revenue guidance came in below consensus and gross margin is guided lower (see "Broadcom's fiscal Q3 2026 results").
The contrast is the day's real character. Relief on rates lifted the index; individual guidance was still marked strictly. On a day driven by macro relief, a small guidance miss would often be forgiven. Broadcom's was not.
4. What is unresolved
- The calendar has narrowed to one date. August CPI, 8:30 am Eastern on September 11. Waller named it himself, and 50.4 percent is the price of waiting for it.
- Waller is one governor. The September decision is an FOMC vote. The July minutes released on August 19 showed a 9-3 split, so a single governor's stated inclination is not the committee's position.
- Oil has not fallen. Brent rose to 96.20 dollars a barrel on September 3 after Iran fired missiles at Kuwait (see "Brent at 96.20 dollars on September 3, 2026"). The force that created the inflation concern is still operating. How much of it shows up in the August print is the question.
- The Dow's point gain was reported as both 624.16 and 635, with the closing level consistent at 53,686.11.
Sources
- Yahoo Finance — Dow rises 635 points on Fed rate-hold hopes, Sep. 3, 2026
- CNBC — Fed Governor Waller indicates he will support holding rates steady at September meeting
- Reuters via Investing.com — Fed's Waller open to leaving rates unchanged at September meeting if inflation cools
- Bloomberg — Treasuries Rise After Fed's Waller Notes Progress on Inflation
- The Motley Fool — Stock Market Midday, Sept. 3: Stocks Rally as Treasury Yields Fall
- The Spokesman-Review — Wall Street climbs after Fed's Waller says he could support rate hold
- US Bureau of Labor Statistics — release schedule (August CPI on September 11)