The stock market experienced a notable surge on Thursday, with the Dow Jones Industrial Average jumping 580 points, as Federal Reserve Governor Christopher Waller signaled a leaning towards keeping interest rates unchanged. The positive market reaction also saw Treasury yields and oil prices ease.

The Dow Jones Industrial Average was up 1.1% by mid-afternoon ET, with the S&P 500 and Nasdaq also posting gains of 1% and 1.3% respectively. The US 10-year Treasury yield, which had reached a three-year high the previous day, fell to 4.756%.

Waller’s remarks on Thursday contrasted with some more hawkish statements seen recently, suggesting a potential pause in rate hikes by the Federal Reserve. Investors had been concerned about the possibility of a rate hike at the upcoming meeting on September 16, which could have increased borrowing costs for consumers.

"If this continues in the data due over the next two weeks, I would be inclined to support holding the target for the federal funds rate at its current setting," Waller stated in an interview. He added, "Give disinflation a chance. We can wait one meeting. What’s the cost of waiting one meeting? Hiking 25 basis points, one meeting right now, is not going to bring the CPI down to 2%."

Waller commented that the economic impact of President Trump's tariffs has been relatively contained, and increased energy prices, influenced by the conflict in Iran, have not significantly permeated the broader economy. He acknowledged that inflation remains above the Federal Reserve's 2% target but noted that recent trends suggest early signs of disinflation.

Brent crude oil futures saw a slight decrease from an earlier peak of $97 a barrel, settling above $95. The price fluctuations followed reports of Iran firing missiles at Kuwait. National average gasoline prices remained above $4 a gallon, a significant increase from the pre-conflict average of $2.98.

Analysts noted that oil exports from the Persian Gulf region have been recovering, though the impact of recent Middle East tensions on these exports remains uncertain. Global oil reserves have been declining, with the U.S. Strategic Petroleum Reserve falling to its lowest level in over four decades. In a separate development, the Trump administration announced an agreement with Venezuela to increase U.S. oil reserves, a move intended to lower gasoline prices.