Stocks Extend Rebound as Falling Treasury Yields Fuel Mega-Cap, Software, and Financial Rally

The major averages extended their rebound on Thursday as easing Treasury yields provided a more favorable backdrop for equities following the sharp rate increase that contributed to the market’s early-week weakness. The S&P 500 gained 1.1%, the Nasdaq Composite climbed 1.4%, and the Dow Jones Industrial Average advanced 1.2%. The rally extended beyond the large-cap benchmarks, with the Russell 2000 rising 0.5% and the S&P MidCap 400 adding 0.9%.

The 10-year Treasury yield fell three basis points to 4.76%, continuing its retreat from the elevated levels reached earlier in the week. The decline followed comments from Federal Reserve Governor Christopher Waller that eased some concerns about another rate hike at the September FOMC meeting.

Waller, a voting FOMC member, acknowledged that inflation remains meaningfully above the Fed’s 2.0% target and left open the possibility of another increase if progress toward price stability stalls. Investors, however, focused more heavily on his observation that recent economic data have shown encouraging signs of disinflation.

The remarks produced a noticeable shift in rate expectations. The CME FedWatch Tool placed the probability of the Fed leaving interest rates unchanged in September at 49.6%, up from 36.8% on Wednesday. That repricing helped ease pressure on Treasury yields and provided renewed support for growth stocks.

Large-cap growth companies were among the primary beneficiaries. The Vanguard Mega Cap Growth ETF advanced 1.6%, helping propel consumer discretionary (+1.6%) and communication services (+1.5%) toward the top of the S&P 500 sector standings.

Tesla (TSLA 376.36, +19.36, +5.42%) was a major contributor to the consumer discretionary sector’s strength, while Meta Platforms (META 610.68, +17.83, +3.01%) provided a significant boost to communication services.

Financials (+1.6%) also ranked among Thursday’s leaders. Major banking stocks participated in the advance, while crypto-related names posted particularly large gains. Robinhood Markets (HOOD 124.72, +17.73, +16.57%) surged 16.6% and Coinbase Global (COIN 192.70, +17.74, +10.14%) jumped 10.1% as Bitcoin climbed above $80,000.

Technology stocks played another significant role in the broader advance, although performance beneath the surface remained uneven. Information technology gained 1.3%, overcoming early semiconductor weakness as software stocks staged a powerful rebound from Wednesday’s selloff.

The iShares GS Software ETF advanced 3.4%, with Snowflake (SNOW 356.24, +50.40, +16.48%) surging 16.5% following an impressive earnings beat. Microsoft (MSFT 510.12, +13.30, +2.68%) gained 2.7% after announcing a significant overhaul of its reporting structure.

Semiconductors remained a relative laggard for much of the session. The PHLX Semiconductor Index finished just 0.1% higher after falling more than 2% shortly after the opening bell, with Broadcom (AVGO 357.16, -10.08, -2.74%) responsible for much of the early pressure.

Broadcom’s decline came despite better-than-expected third-quarter earnings and revenue. Elevated expectations surrounding the company’s AI business and fourth-quarter outlook appeared to overshadow another solid quarterly performance. Importantly, the broader semiconductor group recovered substantially from its early losses as the session progressed, preventing chip weakness from derailing the technology rally.

Elsewhere in the technology space, Dell Technologies (DELL 515.94, +23.74, +4.82%) extended its post-earnings momentum and reached a new all-time high. Hewlett Packard Enterprise (HPE 54.44, +2.61, +5.03%) also advanced following a broad earnings beat and above-consensus fourth-quarter guidance.

Some consumer-related companies were notable exceptions to the otherwise constructive session. Tyson Foods (TSN 51.77, -4.04, -7.24%) remained under pressure after lowering its fiscal 2026 revenue guidance, while The Campbell’s Company (CPB 22.12, -1.66, -6.96%) declined following its earnings report and disappointing fiscal 2027 outlook.

Geopolitical developments remained relatively quiet compared with the significant escalation earlier in the week, allowing investors to focus more heavily on interest rates and corporate developments. WTI crude settled $0.39 higher, or 0.4%, at $91.35 per barrel. The modest increase did little to disrupt the equity rally despite oil remaining above the psychologically important $90 level.

Energy (-0.7%) finished with the widest sector loss, while materials (-0.5%) also retreated. Those declines, however, were easily outweighed by strength across most other areas of the market.

Thursday’s advance built meaningfully on Wednesday’s rebound and marked a notable improvement in sentiment following the difficult start to September. Falling Treasury yields removed some of the valuation pressure that had weighed on equities earlier in the week, while the shift toward greater odds of a September Fed pause provided another source of support.

Strength across mega-cap growth stocks, software, financials, and most other sectors ultimately overwhelmed lingering weakness in select semiconductor and consumer names. The two-session recovery was strong enough to leave the major averages with modest gains for the week heading into Friday, putting the focus on whether easing rate pressure can continue to support the market after an exceptionally volatile start to September.

Our FTinvest 11 model portfolio declined 1.34% to close at 993.53, reversing Wednesday’s rebound and once again falling below the 1,000 level. The latest decline leaves the portfolio approximately 9.4% below its all-time closing high of 1,096.33, placing it increasingly close to the 10% threshold generally associated with a correction.

FTinvest 11 is now up approximately +7.04% year-to-date, preserving a positive return for 2026 despite the sustained retreat from July’s record levels. The inability to hold Wednesday’s recovery above 1,000 highlights the continued weakness and elevated volatility that have characterized recent trading. With the portfolio now less than one percentage point away from correction territory, near-term pressure remains evident, although FTInvest 11 continues to maintain its disciplined, value-driven focus on long-term capital appreciation.