Synopsis
US stock markets enjoyed a boost as easing bond yields and a spike in Moderna shares contributed to a favorable trading environment. Despite the Federal Reserve’s minutes highlighting inflation concerns and discussions on rate hikes, investors remained optimistic. The Treasury’s announcement of liquidity support revitalized riskier assets, particularly in tech stocks, while the success of Moderna’s cancer therapy trial uplifted the healthcare sector.
TIL Creatives US stock market. The main U.S. stock market indexes closed modestly higher on Wednesday, as easing government bond yields boosted risk appetite while a dramatic rally in shares of vaccine-maker Moderna drove gains in the healthcare sector.
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 can
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