Wall Street Rises as Japan's Dovish Stance Boosts Market Sentiment

Wall Street saw an upswing on Wednesday following a dovish turn by Japan's top policymaker, which soothed volatile global markets. The Bank of Japan's Deputy Governor assured no interest rate hikes during financial instability, positively affecting sentiment. Key tech stocks like Nvidia and Amazon.com rebounded, while the VIX fear gauge dropped.

Wall Street experienced an upswing on Wednesday, buoyed by a dovish stance from Japan's top policymaker following a surprise interest rate hike last week that triggered global market volatility.

Global equity markets gained strength after Bank of Japan (BOJ) Deputy Governor Shinichi Uchida confirmed that the central bank would refrain from raising interest rates during periods of financial instability, causing the yen to weaken and uplifting market sentiment. The BOJ's unexpected rate hike on July 31, which reached levels not seen in 15 years, previously led to a spike in the low-yielding yen, often used for investing in high-yield assets like stocks, resulting in a global stock sell-off.

JJ Kinahan, CEO of IG Group North America, noted, "Like many trades that get 'crowded,' people start to see it as an easy way to make money, which usually ends poorly. Now, cooler heads are prevailing." The CBOE Volatility Index, Wall Street's fear gauge, dropped to 23.19 points from a high of 65.73 on Monday. Despite recent volatility, the S&P 500 has risen about 10% this year, while the Nasdaq, driven by tech stocks and AI optimism, has increased by 9%.

(With inputs from agencies.)