U.S. stocks rise on Waller’s dovish comments; NVIDIA acquires Hugging Face for $12.93 billion

Article by: Tide Research

On Thursday, all three major U.S. stock indices closed higher: the S&P 500 rose 1.06% to 7,747.71, marking its largest single-day gain since August 4; the Dow Jones increased 1.18% to 53,686.11; and the Nasdaq climbed 1.40% to 26,584.06. The VIX stood at 14.32, down approximately 5.8%. The 10-year U.S. Treasury yield retreated to around 4.77%, while the 2-year yield hovered near 4.36%. The market rally was primarily driven by Fed Governor Waller’s dovish signal, indicating a preference to hold rates steady in September if inflation continues to ease, causing the probability of a September rate hike to drop from 63% to 52%. U.S. August ISM Services PMI rose to 55.4, hitting a six-month high. NVIDIA announced its acquisition of Hugging Face for $12.93 billion, its largest single acquisition to date; NVIDIA shares rose 3.20%. Bitcoin traded at approximately $77,300. The U.S. Dollar Index fell 0.11% to 99.51. OpenAI released GPT-6 Astra. Lululemon dropped over 8% in after-hours trading.

Federal Reserve Governor Waller delivered the clearest dovish signal since the start of this rate-hiking cycle on Thursday. Waller stated that recent data finally show signs of slowing inflation, and expects next month’s CPI and PPI to be at a “reasonable level.” If the data over the next two weeks continue this trend, he would favor maintaining the interest rate unchanged in the 3.50% to 3.75% range in September. Waller noted that the current rate setting is sufficient to bring U.S. inflation back to 2%, and it is reasonable to wait until the next meeting to make a decision.

After Waller's remarks, interest rate expectations quickly cooled. Traders' bets on a September rate hike dropped from 63% to 60%, then further declined to 52%. U.S. stocks, Treasuries, and gold all rose in tandem.

However, the inflation data is not uniformly positive. The U.S. August ISM Services PMI rose to 55.4, exceeding the expected 54.3 and hitting a six-month high. The prices paid index climbed to 72.6, the highest since August 2022, as rising energy costs are broadly transmitting to the services sector. The increase in service-sector price pressures indicates that inflation easing is not a straightforward path, and the precondition mentioned by Waller—that “if the data continues on this trend”—still needs to be verified.

At the corporate level, NVIDIA was the most talked-about name on Thursday. NVIDIA agreed to acquire the open-source AI platform Hugging Face for $12.93 billion, marking its largest single acquisition to date. Jensen Huang stated that the platform will remain open, allowing free uploading and downloading of models without requiring the use of NVIDIA hardware. This acquisition aims to secure a central node in the open-source ecosystem. NVIDIA rose 3.20%.

On the same day, OpenAI released GPT-6 Astra, claiming it was trained on 100,000 GPUs, with cybersecurity capabilities reaching the company's "critical" level for the first time—able to identify unknown software vulnerabilities and their exploitation methods, though its most powerful features remain partially restricted. ChatGPT, Claude, and Grok experienced simultaneous outages lasting nearly four hours, and all have since been restored. The AI industry is currently navigating a phase marked by simultaneous advancements in model capabilities and challenges to infrastructure stability.

Individually, Snowflake rose 16.55% after earnings, Broadcom fell 2.74%, and Ciena dropped 10.36%. Lululemon slid more than 8% in after-hours trading. Tesla gained 5.42%, continuing its upward momentum from nearly a 20% increase in August into early September.

On the macroeconomic front, the U.S. trade deficit widened by 24.4% month-over-month to $88.6 billion in July, the highest level since March 2025. Surge in capital goods imports, driven by the AI infrastructure boom, led to the largest monthly increase on record for computer parts, with net exports expected to drag Q3 GDP by more than 1.3 percentage points. Physical investment in AI is transitioning from corporate earnings figures to macroeconomic data, as surging imports of chips, servers, and data center equipment are reshaping America’s trade landscape.

In the foreign exchange market, the U.S. dollar fell 1.83% against the yen on Thursday to 155.759, declining nearly 3% over two trading sessions—the largest two-day gain for the yen since August 2024. Hawkish comments from a Bank of Japan policymaker suggesting possible unconventional, consecutive rate hikes have led markets to fully price in a 25-basis-point rate hike in September. The auction of Japan’s 30-year government bonds performed better than expected, providing temporary relief to global bond markets. The U.S. Dollar Index dipped 0.11% to 99.51.

U.S. August Non-Farm Payrolls data (tonight). The ADP employment report showing only 38,000 new jobs has signaled a weakening labor market, while the ISM Services PMI indicated expansion in the services sector—these two reports point in opposite directions. Tonight’s Non-Farm Payrolls will be the final employment report before the September FOMC meeting and a key indicator for testing whether Waller’s “inflation slowdown trend” can be sustained. If the data significantly undershoots expectations, the probability of a September rate hike may decline further; if the data is strong, the dovish expectations triggered by Waller’s remarks could be reassessed.

The key signal from overnight U.S. markets was Waller’s dovish remarks temporarily halting the upward trajectory of rate hike expectations. However, the ISM Services Price Index rose to its highest level since August 2022, indicating that inflation may still face setbacks on its path downward. Markets are currently pricing in an expectation of a rate hike pause, contingent on data over the next two weeks confirming Waller’s assertion that inflation is continuing on a path of sustained moderation.