The major averages extended their rebound on Thursday, with easing Treasury yields providing a more favorable backdrop for equities after their sharp rise contributed to the market's early-week weakness. The S&P 500 (+1.1%), Nasdaq Composite (+1.4%), and DJIA (+1.2%) all finished with sizable gains, while the Russell 2000 (+0.5%) and S&P Mid Cap 400 (+0.9%) also advanced.

The 10-year note yield fell three basis points to 4.76%, continuing its retreat from the elevated levels reached earlier in the week. The move followed comments from Fed Governor Christopher Waller (voting FOMC member) that reduced some concern surrounding the possibility of another rate hike at the September FOMC meeting. While Mr. Waller acknowledged that inflation remains meaningfully above the Fed's 2.00% target and left open the possibility of another increase if progress stalls, investors focused more heavily on his observation that recent data have shown encouraging signs of disinflation. The CME FedWatch Tool assigned a 49.6% probability to the Fed leaving rates unchanged in September, up from 36.8% yesterday.

Thursday's advance featured particularly strong participation from large-cap growth stocks, with the Vanguard Mega Cap Growth ETF rising 1.6%. That strength helped propel the consumer discretionary (+1.6%) and communication services (+1.5%) sectors toward the top of the standings, with Tesla (TSLA 376.36, +19.36, +5.42%) and Meta Platforms (META 610.68, +17.83, +3.01%) among the more notable contributors.

The financials sector (+1.6%) was another source of leadership. Major banking names participated in the advance, while Robinhood Markets (HOOD 124.72, +17.73, +16.57%) and Coinbase Global (COIN 192.70, +17.74, +10.14%) posted especially large gains alongside a sharp increase in Bitcoin that carried the cryptocurrency above $80,000.

Technology stocks also played a significant role in the broader advance, although performance beneath the surface remained uneven. The information technology sector (+1.3%) overcame early semiconductor weakness as software stocks staged a pronounced rebound from Wednesday's selloff. The iShares GS Software ETF advanced 3.4%, with Snowflake (SNOW 356.24, +50.40, +16.48%) surging following an impressive earnings beat and Microsoft (MSFT 510.12, +13.30, +2.68%) gaining after announcing a significant overhaul of its reporting structure.

Semiconductor stocks were a relative laggard for much of the session after the PHLX Semiconductor Index (+0.1%) fell more than 2% shortly after the open, largely due to Broadcom's (AVGO 357.16, -10.08, -2.74%) post-earnings decline. The group recovered considerably as the session progressed, however. Broadcom's weakness came despite better-than-expected Q3 earnings and revenue, as elevated expectations surrounding its AI business and Q4 outlook appeared to outweigh another solid report.

Elsewhere in the technology space, Dell (DELL 515.94, +23.74, +4.82%) extended its post-earnings momentum and reached a new all-time high, while Hewlett Packard Enterprise (HPE 54.44, +2.61, +5.03%) moved lower despite reporting a broad earnings beat and above-consensus Q4 guidance. Some consumer-related names were notable exceptions to the otherwise constructive action. Tyson Foods (TSN 51.77, -4.04, -7.24%) remained under pressure after lowering its FY26 revenue guidance, while The Campbell's Company (CPB 22.12, -1.66, -6.96%) fell following its earnings report and disappointing FY27 outlook.

Meanwhile, geopolitical developments remained relatively quiet compared with earlier in the week. WTI crude settled $0.39 higher (+0.4%) at $91.35 per barrel, with the modest increase doing little to disrupt the equity rally. The energy sector (-0.7%) finished with the widest loss, while the materials sector (-0.5%) also retreated.

Ultimately, Thursday's advance built meaningfully on Wednesday's rebound as easing Treasury yields removed some of the pressure that weighed on stocks earlier in the week. Strength across mega-cap stocks, software, financials, and most other areas of the market more than offset lingering weakness in select semiconductor and consumer names, leaving the major averages with modest week-to-date gains heading into Friday's session.

U.S. Treasuries climbed on Thursday, though they made little intraday progress, finishing near their starting levels. The 2-year note yield settled down six basis points to 4.33%, and the 10-year note yield settled three basis points to 4.76%. 

• Russell 2000: +19.6% YTD
• Nasdaq Composite: +14.4% YTD
• S&P Mid Cap 400: +14.4% YTD
• S&P 500: +13.2% YTD
• DJIA: +11.7% YTD

Reviewing today's data: 

• July Trade Balance -$88.6 bln (Briefing.com consensus -$89.6 bln); Prior was revised to -$71.2 bln from -$73.3 bln
  • The key takeaway from the report is that the widening deficit will be a drag on Q3 GDP growth estimates.
• Q2 Productivity -Rev. 1.4% (Briefing.com consensus 1.4%); Prior 1.4%, Q2 Unit Labor Costs-Rev. 1.2% (Briefing.com consensus 1.3%); Prior 1.3%
  • The key takeaway from the report is that the downtick in unit labor costs from the advance estimate helped keep inflation concerns in check.
• Weekly Initial Claims 206K (Briefing.com consensus 205K); Prior was revised to 204K from 203K, Weekly Continuing Claims 1.779 mln; Prior was revised to 1.771 mln from 1.778 mln
  • The key takeaway from the report is that the low level of initial jobless claims continues to connote a low-firing environment.
• August S&P Global U.S. Services PMI - Final 56.5; Prior 56.8
• August ISM Non-Manufacturing Index 55.4% (Briefing.com consensus 54.1%); Prior 54.1%
  • The key takeaway from the report is that it shows services organizations haven't seen any relief in the prices they are paying for materials and services. That invites the risk of pass-through to customers and sustained inflation issues.