Wall Street climbs as rate hike bets recede

Wall Street indexes opened higher on Thursday as traders priced in a lower probability for a September interest-rate hike from the Federal Reserve after comments from Fed Governor Christopher Waller.

The probability for a September hike had been rising since Fed Chair Kevin Warsh's speech in Jackson Hole last week. But Waller said on Thursday at a Reuters NEXT event in Washington that if upcoming data confirms inflation pressures are cooling off, that he is inclined to argue in favor of keeping interest rates steady at the next policy meeting, which is scheduled for September 15 to September 16.

CME Group's FedWatch tool last showed a 48.4% probability for a 25 basis-point hike in December, down from 63.2% on Wednesday.

Meanwhile, in Thursday's batch of data, initial claims for state unemployment benefits climbed 2,000 to a seasonally adjusted 206,000 for the week ended August 29, according to the Labor Department. This compares with economist expectations for 205,000 claims for the latest week.

Among the S&P 500's 11 industry sectors, all but three were gaining with communications services .SPLRCL leading the advance, up about 2%. Healthcare .SPXHC, consumer staples .SPLRCS and materials .SPLRCM were the biggest laggards, all down around 0.5%.

While earnings season is largely over, Broadcom AVGO.O was the latest company to report, late on Wednesday. The chip company raised its long-term AI chip revenue forecast, but its shares tumbled more than 4% as its Q4 revenue expectation missed Wall Street expectations.

The outlook appeared to sour investors on the broader chip sector, with less than a handful gaining in the PHLX semiconductor index .SOX, which was off more than 1%.