US Stock Market Trends (September 4): Fed’s Waller Turns Dovish, Nasdaq Gains 1.4%, Nvidia Acquires Hugging Face

Written by: Trend Research

On Thursday, the three major US stock indices closed higher across the board. The S&P 500 rose 1.06% to 7,747.71 points, marking its largest single-day gain since August 4; the Dow Jones Industrial Average increased 1.18% to 53,686.11 points; and the Nasdaq Composite gained 1.40% to 26,584.06 points. The VIX stood at 14.32, falling approximately 5.8%. Yields on the 10-year US Treasury note retreated to around 4.77%, while the 2-year note traded near 4.36%. The core driver behind the market rally was Fed Governor Waller's dovish signal, stating that if inflation continues to ease, he will lean toward supporting keeping interest rates unchanged in September, causing the probability of a September rate hike to fall from 63% to 52%. The US August ISM Services PMI rose to 55.4, hitting a six-month high. Nvidia announced the acquisition of Hugging Face for $12.93 billion, its largest single transaction to date, and Nvidia shares rose 3.20%. Bitcoin traded at around $77,300. The Dollar Index fell 0.11% to 99.51. OpenAI released GPT-6 Astra. Lululemon dropped over 8% in after-hours trading.

Waller Strikes a Dovish Tone, September Rate Hike Probability Falls from 63% to 52%

Fed Governor Waller delivered the clearest dovish signal since the current tightening cycle began on Thursday. Waller stated that recent data finally shows signs of easing inflation, and he expects next month's CPI and PPI to reach "reasonable levels." If data over the next two weeks continues this trend, he will lean toward supporting keeping interest rates unchanged in the 3.50%-3.75% range in September. Waller noted that current rate settings can bring US inflation back to 2%, and a decision can wait until the next policy meeting.

Following Waller's remarks, rate expectations cooled rapidly. Traders' bets on a September rate hike dropped from a previous 63% to 60%, before falling further to 52%. US equities, Treasuries, and gold rose in tandem.

However, inflation data has not been overwhelmingly positive. The US August ISM Services PMI rose to 55.4, beating expectations of 54.3 and marking a six-month high. The Prices Paid Index climbed to 72.6, its highest level since August 2022, as rising energy costs are being widely passed through to the services sector. Increasing price pressures in services mean that the disinflationary path is not smooth, and Waller's conditional premise of "if data continues the trend" still requires verification.

Nvidia's $12.93 Billion Acquisition of Hugging Face, OpenAI Releases GPT-6 Astra

At the corporate level, Nvidia was the most watched name on Thursday. Nvidia agreed to acquire the open-source AI platform Hugging Face for $12.93 billion, representing its largest single acquisition to date. Jensen Huang stated that the platform will remain open, allowing free uploading and downloading of models without mandating the use of Nvidia hardware. This acquisition aims to secure control over a core node of the open-source ecosystem. Nvidia shares rose 3.20%.

OpenAI also released GPT-6 Astra on the same day, claiming it was trained using 100,000 GPUs. Its cybersecurity capabilities have reached the company's "critical" tier for the first time, enabling it to identify unknown software vulnerabilities and discover exploitation methods, though its strongest features are not yet fully available. ChatGPT, Claude, and Grok experienced simultaneous outages lasting nearly four hours but have since recovered. The AI industry is currently navigating a phase where rapid model enhancements run parallel to infrastructure stability challenges.

In individual stocks, Snowflake surged 16.55% after earnings, Broadcom closed down 2.74%, and Ciena fell 10.36%. Lululemon dropped over 8% in after-hours trading. Tesla rose 5.42%, extending its momentum from an August gain of nearly 20% into early September.

ISM Services PMI Hits Six-Month High, AI Infrastructure Boom Widens Trade Deficit

Regarding macroeconomic data, the US trade deficit widened by 24.4% month-over-month to $88.6 billion in July, reaching its highest level since March 2025. The AI infrastructure boom has driven a surge in capital goods imports, with computer components posting their largest single-month increase ever. Net exports are expected to drag on Q3 GDP by more than 1.3 percentage points. Physical investment in AI is transitioning from corporate financial report figures into macroeconomic statistics, with surging imports of chips, servers, and data center equipment reshaping the US trade landscape.

Yen Rises Nearly 3% Over Two Sessions, Breaking Past 156, Dollar Index Slides Below 99.51

In currency markets, the USD/JPY pair fell 1.83% to 155.759 on Thursday, accumulating a drop of nearly 3% over two consecutive sessions, giving the yen its largest two-day gain since August 2024. Hawkish members of the Bank of Japan hinted at unconventional, consecutive rate hikes, leading the market to fully price in a 25-basis-point rate increase in September. The auction results for Japanese 30-year government bonds came in better than expected, providing temporary relief to global bond markets. The Dollar Index declined 0.11% to 99.51.

Key Focus Tonight

US August Non-Farm Payrolls Data (Tonight). With only 38,000 new jobs added in the ADP report signaling a weakening labor market, and the ISM Services PMI indicating expansion in the services sector, these two datasets point in opposing directions. Tonight's non-farm payrolls data will be the final employment report prior to the September FOMC meeting and serves as a key variable to verify whether Waller's "continuing inflation-easing trend" holds true. If non-farm payrolls significantly miss expectations, the probability of a September rate hike could fall further; if the data proves strong, the dovish sentiment sparked by Waller's comments may face re-evaluation.

The core overnight signal from US equities was that Waller's dovish remarks temporarily interrupted the upward trajectory of rate hike expectations. However, the ISM Services Prices Paid index has risen to its highest level since August 2022, indicating that the disinflationary process remains subject to potential setbacks. The market is currently pricing in an expectation of a rate hike pause, a trade contingent on data over the next two weeks validating Waller's assertion of a "continued inflation-easing trend."