Investors barely reacted to minutes from the U.S. Federal Reserve’s July meeting, which showed deepening concern about inflation with “several” policymakers ready to raise interest rates. “Many” said a rate hike would be needed if inflation does not decline to the U.S. central bank’s 2% target.
But a day after the yield on the 30-year Treasury bond hit its highest level since 2007, the yield fell on Wednesday along with the 10-year Treasury yield. The moves came after the U.S. Treasury announced it would double the size of liquidity support buyback operations for longer-dated bonds.
“The risk-on trade is trying to hang on to the lifeline that Treasury Secretary Bessent sent,” said Carol Schleif, chief market strategist at BMO Private Wealth, noting that riskier assets including high-profile technology stocks had sold off in recent days as bond yields rose.
Concerns over ballooning government debt and rising inflation had pushed global bond yields to multi-decade highs on Tuesday. Schleif said investors were relieved by the government support as higher rates “could potentially impact the AI trade” as technology companies have been issuing debt and equity and using their own cash to fund construction of data centers supporting AI.
However, equity indexes pared gains as the session wore on. Jim Baird, chief investment officer at Plante Moran Financial Advisors, said that investors likely took some profits after the initial rally and he added that the morning’s announcement “doesn’t mean that the longer-term issue of higher rates is off the table.”
According to preliminary data, the S&P 500 gained 18.15 points, or 0.24%, to end at 7,709.91 points, while the Nasdaq Composite gained 40.08 points, or 0.15%, to 26,331.09. The Dow Jones Industrial Average rose 123.94 points, or 0.23%, to 53,467.34.Moderna’s shares surged more than after the company said its personalized mRNA cancer therapy developed with Merck cut the risk of melanoma recurrence and spread in a late-stage trial. Merck shares also jumped and it was the biggest gainer in the blue-chip Dow.
Moderna’s rallyboosted healthcare peers such as Novavax and U.S.-listed shares of BioNTech.
The S&P 500 healthcare sector rallied sharply, hitting a record high and providing the biggest boost to the benchmark index from any of its 11 major industry sectors. The Nasdaq biotechnology index also jumped.
S&P 500 information technology stocks dipped during the session with chip stocks leading losses.
However, Marvell Technologies shares climbed after it said it will help develop Google’s in-demand custom chips and has offered the search giant the right to buy a potential $12.2 billion stake.
Marvell was one of the few gainers in the volatile Philadelphia semiconductor index, which ended lower. Google parent Alphabet’s shares were little changed during the session.
Target shares rose after the retailer raised its annual sales forecast. Lowe’s shares gained even after it trimmed its annual sales growth forecast and Estee Lauder shares jumped after the cosmetics maker forecast annual profit above Wall Street estimates.
Brent crude futures settled higher with Middle East progress still unclear. U.S. President Donald Trump said no talks were taking place with Iran and insisted the Strait of Hormuz was open, contradicting Iran’s assertion that the strait remained shut to shipping.
