US equities finished Wednesday's session in positive territory, with the Dow Jones Industrial Average climbing 110 points, or 0.22%, to close at a record high. The S&P 500 and Nasdaq Composite also advanced, each gaining roughly 0.2%, as a decline in long-term Treasury yields helped offset lingering concerns about interest rates and the artificial intelligence trade.
The market's initial rally was more pronounced, with the Dow at one point up more than 300 points and the S&P 500 and Nasdaq each gaining as much as 0.7% and 0.6%, respectively. The momentum faded into the close, reflecting investor caution about the broader rate outlook.
Treasury Buybacks Weigh on Yields
The catalyst for the early strength was the US Treasury's announcement that it would at least double the size of its debt buyback operations, focusing on longer-dated securities with maturities between 10 and 30 years, including 20-year bonds. The move helped reverse a recent spike in long-term borrowing costs.
The 30-year Treasury yield fell nine basis points to 5.195%, after touching a 19-year high above 5.33% in the prior session. The 10-year yield declined more than five basis points to 4.653%. Lower yields provided a tailwind for rate-sensitive sectors, with home improvement retailers Lowe's and Home Depot gaining around 3% and 2%, respectively.
However, the relief may be temporary. The Federal Reserve's July meeting minutes, released Wednesday, showed that several policymakers favored a rate hike at that meeting, while many indicated that further tightening could be warranted if inflation does not cool. The Fed held its benchmark rate at 3.5% to 3.75%, with three officials dissenting in favor of a quarter-point increase.
Moderna Leads Healthcare Rally
Moderna was the standout performer, with shares more than doubling—up over 176%—after the company reported positive late-stage trial results for a personalized mRNA cancer treatment developed in partnership with Merck. The therapy met its primary goal of reducing melanoma recurrence and its secondary goal of preventing cancer spread. Merck shares also climbed more than 12%.
The surge in Moderna lifted other healthcare names, including Novavax and BioNTech's US-listed shares. The S&P 500 healthcare sector reached a record high and was the biggest contributor to the benchmark's gains among its 11 major sectors. For more on the broader market reaction, see our earlier coverage of the Dow's climb.
Tech Stocks Face AI and Rate Pressures
Not all technology stocks benefited from the yield decline. Broadcom and Advanced Micro Devices each fell around 4%, and the Philadelphia semiconductor index ended lower. The weakness followed a report that OpenAI's second-quarter results disappointed investors, with revenue up 18% from the prior quarter but losses widening.
Technology companies remain sensitive to borrowing costs as they continue heavy spending on AI infrastructure. Rising yields had recently pressured the sector, and Wednesday's Treasury action provided only temporary relief. For context on the recent slide in AI-related stocks, see our analysis of AI infrastructure stocks.
Marvell Technology was a notable gainer, rising 9% after announcing an expanded partnership with Google on custom AI chips. Alphabet received a warrant to purchase up to $12.2 billion of Marvell shares, a deal that ties Google's stake to AI chip revenue. For more on that development, see our report on Marvell's surge.
Commodities and Global Risks
Brent crude futures ended higher as geopolitical uncertainty in the Middle East remained elevated, with conflicting statements about shipping through the Strait of Hormuz. Investors also kept an eye on global inflation trends.
Overall, the major US indexes ended modestly higher, but the retreat from session highs underscored lingering concerns about the path of interest rates. The Treasury buyback program may offer some near-term support, but the Fed's hawkish tilt and ongoing AI-related volatility suggest caution remains warranted.
This article is for informational purposes only and does not constitute financial advice.
