Wall Street gains on rate comments from Fed's Waller

Wall Street's main indices have opened higher after Federal Reserve governor Christopher Waller said he could support holding rates steady this month if data confirms price pressures are cooling off.

The comments prompted traders to lower bets on a hike, and could dispel the gloom in markets following the latest military exchanges between the US and Iran.

"My decision on the appropriate stance of policy will be heavily influenced by what we learn about August inflation," Waller said in remarks at a Reuters NEXT Newsmaker event in Washington DC.

"If there is continued progress toward our 2.0 per cent goal, then I am willing to support holding the policy rate at its current level," Waller said.

But borrowing costs may need to rise if inflation data shows price pressures persist, he said.

Traders still expect a nearly 48 per cent chance of a hike this month, according to the CME FedWatch tool.

"I'm expecting a pretty crazy September. It's just roller coaster season," said Kim Forrest, chief investment officer at Bokeh Capital Partners.

Volatility before the mid-terms and potentially thinner liquidity in September gives "a setup for investors to be over-reactive and for the market to have some highs and lows," she said.

Investors hungry for positive catalysts are now eyeing Friday's jobs data but some have cautioned against placing too much emphasis on the report as Federal Reserve chair Kevin Warsh has indicated that controlling inflation remains his top priority.

A prolonged conflict in the Middle East could also complicate the rate outlook further by compounding inflation pressures.

Brent crude futures rose 0.49 per cent on Thursday - their fourth consecutive day of gains.

"Oil has rebuilt some geopolitical premium, creating another potential inflationary headache at a time when markets are already debating whether US rates need to move higher," said Daniela Hathorn, senior market analyst at Capital.com.

In early trading on Thursday, the Dow Jones Industrial Average rose 394.74 points, or 0.74 per cent, to 53,456.69, the S&P 500 gained 41.29 points, or 0.54 per cent, to 7,707.89 and the Nasdaq Composite gained 160.20 points, or 0.61 per cent, to 26,378.03.

Broadcom fell 5.26 per cent after its fourth-quarter revenue forecast fell short of Wall Street's lofty expectations, underscoring that the firms at the centre of the AI buildout have a high bar to clear.