Stocks rally on Waller's dovish turn as bitcoin retakes $81k

US stocks rallied Wednesday, September 3, snapping a three-day losing streak after Fed Governor Waller said a rate hike wouldn't be warranted if underlying inflation keeps slowing. Treasury yields eased on the remarks — a dovish note that sits in tension with Fed Chair Kevin Warsh's hawkish Jackson Hole speech on August 28, which had already pushed September rate-hike odds to roughly 57-60% on fed funds futures.

What to watch

The August jobs report (nonfarm payrolls) lands Thursday at 8:30am ET, the week's key release, alongside wholesale inventories at 10:00am ET. The next FOMC meeting is September 15-16, and fed funds futures are still pricing around 55-60% odds of a 25-basis-point hike rather than a cut — an unusual setup that reflects Warsh's hawkish tilt more than Waller's.

Markets

The S&P 500 gained 1.06% to close at 7,747.71, the Dow Jones Industrial Average rose 1.18% (+624.16 points) to 53,686.11, and the Nasdaq Composite added 1.4% to 26,584.06. AI stocks led the Nasdaq's advance; Broadcom fell despite beating earnings estimates.

In Europe, as of the September 2 close (the most recent available), the FTSE 100 outperformed with a 0.29% gain on its commodity- and bank-heavy weighting, while continental bourses lagged: the DAX fell 1.09%, the CAC 40 dropped 0.79%, Spain's Ibex slipped 0.34%, and Italy's FTSE MIB edged up 0.10%. The divergence tracked Iran-linked oil price gains and rising long-term bond yields, which hit continental industrials harder than London's resource-heavy index.

Commodities

Brent crude traded near $99.38 a barrel and WTI opened around $90.58, both lifted by renewed Middle East tension tied to Iran. Gold held near $4,491 an ounce, close to record territory.

Crypto

Bitcoin surged 4.0% to $81,209.47, its first trip above $82,000 intraday since May 11, while ether climbed 4.2% to $2,518.82. The move was part of a broader risk-on rally — over $1.45 trillion added across global markets — driven by falling Treasury yields and cooling near-term rate-hike expectations after Waller's comments.

On regulation, the SEC formally proposed "Regulation Crypto Assets" on August 18, a tailored offering regime creating two fundraising exemptions and one investment-contract safe harbor for crypto projects, aimed at reducing incentives for issuers to move offshore and expanding investor access with stronger protections. Public comments are due October 20. Separately, the Clarity Act — which would split crypto oversight between the SEC and CFTC — is widely seen as dead for 2026 after missing its legislative window when the Senate adjourned for August recess without voting.

What it means for crypto trading

Friday's jobs report is the pivot point for both equities and crypto. A soft print would reinforce Waller's dovish case and likely extend the rally as rate-hike odds fade further; a hot print would revive Warsh's hawkish case — with hike odds already exceeding cut odds for the September 15-16 meeting — and could sharply reverse today's risk-on move.

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