2 weeks ago
Wall Street Rises as Easing Yields, Moderna Boost Healthcare
U.S. stocks went up a little on Wednesday.
Bond yields fell after the Treasury announced larger support operations for longer-term bonds.
Lower yields can make investors more willing to buy riskier assets.
Moderna’s stock jumped after it reported encouraging results for a personalized cancer treatment.
The treatment reduced the risk of melanoma returning or spreading in a late-stage trial.
Other healthcare companies, including Merck, Novavax, and BioNTech, also saw their shares rise.
Healthcare stocks became the strongest-performing major sector.
Investors were still cautious because Federal Reserve officials discussed possibly raising interest rates if inflation stays too high.
U.S. stock indexes rose modestly as government bond yields eased and investors’ risk appetite improved.
Moderna shares surged more than 137% after reporting positive late-stage melanoma-treatment trial results.
Merck gained about 12%, while Novavax rose more than 8% and BioNTech climbed 19%.
The S&P 500 healthcare sector rose more than 3% to a record high, leading gains among major sectors.
Federal Reserve minutes showed several policymakers open to raising rates if inflation fails to reach the 2% target.
- Who
- U.S. stock investors, the Federal Reserve, the U.S. Treasury, Moderna, Merck, Novavax, and BioNTech.
- What
- U.S. stock indexes rose modestly as bond yields eased and healthcare shares rallied after Moderna reported positive trial results.
- Where
- U.S. financial markets.
- When
- Wednesday, Aug. 19; the market figures were reported at 2:22 p.m.
- Why
- Lower bond yields improved risk appetite, while Moderna’s cancer-treatment results boosted healthcare stocks; inflation concerns continued to support the possibility of future rate hikes.
Market Optimism
Inflation and Rate Concerns
Bond yields and risk appetite
Market Optimism
Investors welcomed falling longer-term Treasury yields and increased support for bond-market liquidity, helping riskier assets stabilize.
Inflation and Rate Concerns
Government debt and inflation concerns had recently pushed global bond yields to multi-decade highs, pressuring riskier assets.
Interest-rate outlook
Market Optimism
Investors barely reacted to the Federal Reserve minutes, suggesting the discussion did not materially disrupt the market rally.
Inflation and Rate Concerns
Several policymakers were prepared to raise interest rates, and many said a hike would be needed if inflation does not fall to 2%.
Healthcare versus technology
Market Optimism
Strong Moderna trial results lifted healthcare companies broadly, with the healthcare sector providing the largest boost to the S&P 500.
Inflation and Rate Concerns
Higher interest rates could affect technology and artificial-intelligence investment because companies are using debt, equity, and cash to build data centers.
Key facts
- Dow Jones Industrial Average
- Rose 125.61 points, or 0.24%, to 53,469.01.
- S&P 500
- Gained 22.52 points, or 0.29%, to 7,714.28.
- Nasdaq Composite
- Gained 36.11 points, or 0.14%, to 26,325.82.
- Moderna shares
- Surged more than 137%.
- Healthcare sector
- The S&P 500 healthcare sector rose more than 3% and reached a record high.
- Federal Reserve inflation target
- The minutes referenced the central bank’s 2% inflation target.
- Information technology sector
- S&P 500 information technology stocks fell 0.6%.
Quotes
Carol Schleif
Chief market strategist at BMO Private Wealth
“The risk-on trade is trying to hang on to the lifeline that Treasury Secretary Bessent sent.”
livemint.com
Sources
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