Rate-hike odds fall from 70% to roughly even per CME FedWatch
Stocks climbed after Federal Reserve Governor Christopher Waller said he would support holding interest rates steady if August inflation data supports such a decision. The Dow Jones Industrial Average gained 1.2% to close at 53061.95, the S&P 500 added 1.1% to reach 7666.6, and the Nasdaq composite climbed 1.4% to 26217.83, according to figures reported in the Wall Street Journal’s daily What’s News newsletter.
Waller’s comments reshaped expectations for the Federal Reserve’s September meeting. The implied probability of a rate increase at the meeting fell to roughly 50-50 from 70% a day earlier, according to CME FedWatch data cited in the Journal’s newsletter.
Waller conditioned his support for a pause on the August inflation data, which had not been released as of the newsletter’s publication. His remarks did not commit the central bank to a particular path, and the Fed’s next rate decision is expected at its September meeting. The market reaction was broad-based, with all three major U.S. equity benchmarks gaining more than 1% on the session.
Beyond the Federal Reserve story, the newsletter covered several other developments.
Vice President JD Vance rejected pressure from some Republicans to distance himself from former Fox News host Tucker Carlson. Carlson has alleged that some American politicians put Israel’s interests over those of the United States and hosted Nick Fuentes, a Holocaust denier, on his podcast last fall. Vance told reporters that while he disagrees with Carlson on many issues, he won’t “throw friends under the bus.”
The Treasury Department and IRS proposed rules that would declare racial discrimination contrary to fundamental U.S. public policy. The proposed regulation could affect up to 18,000 institutions and threaten a financial benefit central to many schools’ business models. The administration is seeking public comment, and the new rules could take months or years to finalize and formally enforce.
A federal grand jury indicted ICE officer Christian Castro on charges of making false statements to investigators during a probe into the shooting of Julio Sosa-Celis during an immigration crackdown in Minneapolis in January. According to the newsletter, this is the first time the Justice Department has secured charges against an ICE officer stemming from conduct during the immigration enforcement surge in the Twin Cities. Castro could not be reached for comment, and a lawyer for him could not be identified.
The newsletter reported that Nvidia agreed to acquire Hugging Face, an AI platform for accessing open-weight AI models. Such models let users download, customize, and run them on their own hardware. The deal strengthens Nvidia’s challenge to proprietary models from U.S. companies like OpenAI and Anthropic and positions the chipmaker to compete against open models developed in China.
Some Republican lawmakers are warning that President Trump could be a liability in the midterms, citing his low approval ratings, focus on construction projects, and public disputes with allies. Other Republicans argued Trump could fire up the base and help the party retain control of Congress. The tension is set to surface at next week’s Republican midterm convention in Dallas.
Rep. Jim McGovern (D., Mass.) told the newsletter that “the message is getting out that a lot of members are frustrated and angry” after two centrist Democrats sided with Republicans on a rules package that led to a vote on a resolution to condemn socialism. The incident has raised questions about whether Minority Leader Hakeem Jeffries, a possible next House speaker, can keep his caucus in line.