By Niket Nishant and Tharuniyaa Lakshmi
Sept 3 (Reuters) - Wall Street's main indexes rose on Thursday after Federal Reserve Governor Christopher Waller said he could support holding rates steady this month if data confirms price pressures are cooling off.
The comments prompted traders to lower bets on a hike, and could dispel the gloom in markets following the latest military exchanges between the U.S. and Iran.
But borrowing costs may need to rise if inflation data shows price pressures persist, he
said. Traders still expect a nearly 50% chance of a hike this month, according to the CME FedWatch tool.
"Even if domestic inflation data improves, a sustained rise in oil prices could keep inflation concerns alive and make it harder for the Fed to remain on the sidelines," said Jeff DerGurahian, loanDepot's chief investment officer.
Brent crude futures rose 0.49% on Thursday — their fourth consecutive day of gains.
Separately, data released on Thursday showed U.S. services sector activity picked up in August.
Investors hungry for positive catalysts are now eyeing Friday's jobs data, but some have cautioned against placing too much emphasis on the report as Federal Reserve Chair Kevin Warsh has indicated that controlling inflation remains his top priority.
In Thursday's batch of data, initial claims for state unemployment benefits rose by 2,000 to a seasonally adjusted 206,000 in the week ended August 29, broadly in line with economists' expectations.
CHIPS WEIGH, SOFTWARE JUMPS
At 11:25 a.m. ET, the Dow Jones Industrial Average rose 612.96 points, or 1.15%, to 53,673.94, the S&P 500 gained 70.70 points, or 0.93%, to 7,737.70 and the Nasdaq Composite gained 323.62 points, or 1.23%, to 26,541.45.
Communication services stocks led gains among the S&P 500's 11 sectors, rising about 1.76%, while healthcare and materials <.SPLRCM> slipped.
Broadcom dropped 4.9% to a five-month low after its fourth-quarter revenue forecast fell short of Wall Street's lofty expectations, underscoring that the firms at the center of the AI buildout have a high bar to clear.
The weakness spilled over to chipmakers, with the Philadelphia Semiconductor index down more than 1%.
Snowflake soared 20.14% to its highest since December 2021 after forecasting strong annual revenue, boosting sentiment across the software sector. ServiceNow rose 5.24%, while Salesforce and Adobe gained about 2.87% and 2.33%, respectively.
Crypto-linked stocks rose after bitcoin rebounded following two straight sessions of losses, with Strategy surging 12.59%, Coinbase Global climbing 9.76% and retail trading platform Robinhood Markets jumping 14.76%.
With geopolitical risks clouding the outlook and the earnings calendar offering few clear catalysts, investors may have limited reasons to push stocks meaningfully higher this month.
Nine of the 40 worst drops in the history of the S&P 500 index happened during September, according to eToro analyst Jakub Rochlitz.
Advancing issues outnumbered decliners by a 2.09-to-1 ratio on the NYSE and by a 1.64-to-1 ratio on the Nasdaq.
The S&P 500 posted 14 new 52-week highs and seven new lows, while the Nasdaq Composite recorded 51 new highs and 78 new lows.
(Reporting by Niket Nishant and Tharuniyaa Lakshmi in Bengaluru; Editing by Devika Syamnath and Maju Samuel)
