By Stephen Culp and Tharuniyaa Lakshmi
NEW YORK, Sept 17 (Reuters) - Wall Street bounced back on Thursday as easing oil prices, dropping US Treasury yields and solid labor data helped markets move beyond the Federal Reserve's first interest rate hike in more than three years.
All three major US stock indexes were sharply higher, as a broad, tech-led rally put the Nasdaq out front.
Crude prices dropped, touching a one-week low before paring losses after supply disruption fears were calmed by reports
of Saudi oil moving through Oman.
But oil pared losses amid roiling Middle East tensions, which have sent energy prices soaring since the onset of the US-Israeli war against Iran, which has since morphed into broader global inflationary pressures.
On Wednesday, those pressures moved the Fed, in a unanimous vote, to implement its first increase to the Fed funds target rate since July 2023. The accompanying statement said the central bank was dedicated to bringing about a "timelier return" to the Fed's 2% inflation goal, setting the table for additional policy tightening before year-end.
"The market is a bit relieved at the Fed's coherence in that they all voted in the same way," said Ross Mayfield, investment strategy analyst at Baird in Louisville, Kentucky. "Fed Chair Warsh re-emphasized the Fed's independence."
Financial markets are currently pricing in a 53.1% likelihood of another 25-basis-point rate hike at the Fed's next meeting in October, up from 27.2% a week ago, according to CME's FedWatch tool.
Fed Chair Kevin Warsh stated at his press conference yesterday that the US economy is strong, and ensuring price stability need not harm the job market, a view sustained by the Labor Department's weekly jobless claims report, which showed initial claims dipping to near-1969 lows.
The CBOE Market Volatility Index, often called "the fear index," touched its lowest level in over a week, moving in concert with easing crude prices.
"When you have an oil shock this lengthy, it's bound to start to seep in prices all across the economy. It's really the only major headwind facing the global economy right now," Mayfield added. "And to get any sort of relief or resolve there is a tailwind for consumers, it's a tailwind for corporates, and it allows the Fed to be less hawkish."
The Dow Jones Industrial Average rose 366.48 points, or 0.71%, to 51,828.44, the S&P 500 gained 85.12 points, or 1.13%, to 7,636.93 and the Nasdaq Composite gained 421.14 points, or 1.62%, to 26,399.68.
Tech led the percentage gainers among 11 major sectors of the S&P 500. Consumer staples were the sole decliners, showing only nominal losses on the day.
Gold and silver miners, chips were among the clear outperformers, both up over 3%.
Homebuilders gained ground after housing data showed single-family housing starts and pending home sales increased last month.
Interest rate-sensitive banks stabilized after Wednesday's 2.3% selloff. The index was last up 0.4%.
Crypto-linked stocks rose after the US Securities and Exchange Commission unveiled a five-year exemption for tokenized stock trading. Circle Internet Group and Robinhood rose 5.4% and 2.9%, respectively, while Coinbase advanced 4.4%.
CoreWeave fell 4.7% after it announced plans to raise capital via stock and convertible bond offerings.
Fluence Energy tumbled more than 14.7% after lowering its revenue forecast for fiscal year 2026.
Advancing issues outnumbered decliners by a 3.07-to-1 ratio on the NYSE. There were 87 new highs and 116 new lows on the NYSE.
On the Nasdaq, 3,447 stocks rose and 1,229 fell as advancing issues outnumbered decliners by a 2.8-to-1 ratio.
The S&P 500 posted 12 new 52-week highs and 17 new lows while the Nasdaq Composite recorded 50 new highs and 100 new lows.
(Reporting by Stephen Culp; Additional reporting by Niket Nishant and Tharuniyaa Lakshmi in Bengaluru; Editing by David Gregorio)
