US stock indices bounced back on Wednesday after a technology-led selloff the day before. This recovery was supported by a drop in government bond yields. The S&P 500 rose 0.4%, and the Dow Jones Industrial Average increased by 0.5%. The Nasdaq Composite remained nearly unchanged. This rebound followed the US Treasury's announcement to double its liquidity-support buyback operations for longer-dated government bonds. This move helped ease pressure in the bond market.
Key Details
The yield on the 30-year US Treasury bond fell to 5.20%. This came after it reached a 19-year high earlier in the week. The yield on the 10-year Treasury also decreased to 4.66% from 4.72%. The Treasury's plan aims to boost buybacks of bonds in the 10-year to 30-year range. It will increase the maximum size of operations from $2 billion to at least $4 billion. This action is meant to provide greater liquidity support in the longer-dated bond market, according to the Treasury.
Background
In corporate news, shares of Moderna surged more than 150%. This spike followed the company reporting positive results from a late-stage trial of its personalized mRNA cancer treatment, developed with Merck. Merck's shares also rose by 9.6%. Other biotechnology stocks, including Novavax and BioNTech, saw gains as well. Additionally, Target's stock climbed 3.3% after raising its annual sales outlook. Lowe's advanced 1.8% despite lowering its sales growth forecast.
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The decline in Treasury yields is likely to support stocks, especially in the technology and biotechnology sectors. Investors may seek riskier assets as the bond market stabilizes. This stabilization could improve sentiment in the broader market. Watch for further updates from the US Treasury about its buyback operations and any upcoming economic data releases that could affect market conditions.
Based on reporting by: standard.co.uk, livemint.com