Stock markets rallied while bond yields fell on Thursday as comments from Federal Reserve Governor Christopher Waller signaled a willingness to remain patient on raising interest rates. The Japanese yen jumped by 2% against the U.S. dollar as traders ramped up bets on a Bank of Japan interest rate hike.

Waller, in remarks for a Reuters NEXT Newsmaker event, said that, if upcoming data confirmed inflation pressures were cooling off, he was inclined to argue in favor of keeping interest rates steady at the U.S. central bank's next policy meeting. Expectations for a rate increase at the Fed's mid-September meeting came down after the comments, with the market now pricing in a roughly 50% chance for a hike, versus about 63% in the prior session, according to CME Fed Watch.

"Commentary from Fed Governor Waller (is) providing a broad lift for markets writ large," said Bill Northey, senior investment director at U.S. Bank Wealth Management, Billings, Montana. The yield on the benchmark U.S. 10-year Treasury note fell 3.8 basis points, on track for its biggest fall since August 25, to 4.756%. Easing bond yields boosted stocks. The Dow Jones Industrial Average rose 624.16 points, or 1.18%, to 53,686.11, the S&P 500 rose 81.11 points, or 1.06%, to 7,747.71 and the Nasdaq Composite rose 366.23 points, or 1.40%, to 26,584.06.

Among the day's decliners, however, was chipmaker Broadcom, whose shares dropped 2.7% following its weaker-than-expected fourth-quarter revenue forecast.