The main U.S. stock market indexes closed modestly higher on Wednesday, as easing government bond yields boosted risk appetites 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 US30YT=RR hit its highest level since 2007, the yield fell on Wednesday along with the 10-year Treasury yield US10YT=RR. 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 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."
The Dow Jones Industrial Average .DJI rose 119.65 points, or 0.22%, to 53,463.05, the S&P 500 .SPX gained 16.22 points, or 0.21%, to 7,707.98 and the Nasdaq Composite .IXIC gained 41.38 points, or 0.16%, to 26,331.09.
Moderna's MRNA.O shares surged almost 177%, leading S&P 500 gainers in a record rally for the company after it announced that its personalized mRNA cancer therapy developed with Merck MRK.N cut the risk of melanoma recurrence and spread in a late-stage trial. Merck MRK.N shares jumped 12.6% and it was the biggest percentage gainer in the blue-chip Dow and the third-biggest in the S&P 500.
Moderna's blistering rallyboosted healthcare peers such as Novavax NVAX.O , which finished up 10.8%, and U.S.-listed shares of BioNTech BNTX.O, which vaulted 22%.
The S&P 500 healthcare sector .SPXHCclosed up 3.5%, marking its biggest one-day percentage gain since April 2025. The sector also hit a record high and provided the biggest boost to the S&P 500 from any of its 11 major industry sectors. The Nasdaq biotechnology index .NBI also jumped 6.4%.
The second-biggest sector gainer was consumer discretionary .SPLRCD, which added 2%.
The S&P 500 industrials index .SPLRCI led percentage losses among the benchmark's industry indexes with a 0.9% decline. The S&P 500 information technology index .SPLRCT was the next-biggest loser, down 0.7%, with pressure from chip stocks.
However, Marvell Technologies MRVL.O shares jumped 9.9% 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 .SOX, which ended down 2%. Google parent Alphabet's GOOGL.Oshares finished up 0.2%.
On the earnings front, Target TGT.N shares rose4.3% after the retailer raised its annual sales forecast. Lowe's LOW.N shares gained 2% even after it trimmed its annual sales growth forecast.
Estée Lauder EL.N shares jumped 16.3%, making it the S&P 500's second-biggest percentage gainer, after the cosmetics maker forecast annual profit above Wall Street estimates.
Brent crude futures LCOc1 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.
Advancing issues outnumbered decliners by a 1.9-to-1 ratio on the NYSE, where there were 263 new highs and 93 new lows. On the Nasdaq, 2,855 stocks rose and 1,967 fell as advancing issues outnumbered decliners by a 1.45-to-1 ratio.
The S&P 500 posted 18 new 52-week highs and no new lows while the Nasdaq Composite recorded 106 new highs and 89 new lows.
On U.S. exchanges 16.92 billion shares changed hands compared with the 16.96 billion moving average for the last 20 sessions.
Reuters
