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Stocks snapped their three-day losing streak Wednesday after the Treasury Department stepped in to stabilize the bond market. A big rally in healthcare stocks also helped support the broader market, though upside was contained as several mega-cap tech stocks struggled.
The Treasury Department this morning said it will “at least double” the size of its buybacks for government bonds, from $2 billion to a minimum of $4 billion. The increase will begin September 9 and run through November 4, and “reflects Treasury’s desire to provide greater liquidity support in longer-dated nominal sectors,” according to a press release.
“Long-term Treasury yields had been under upward pressure amid uncertainty in interest rates, inflation, and the growing federal deficit,” explains Tony Miano, global investment strategy analyst at Wealth & Investment Management at Wells Fargo.
The news sent the 10-year Treasury yield down 6.7 basis points to 4.639%, while the 30-year Treasury yield, which hit a 19-year high earlier this week, plummeted 10 basis points to 5.185%.
But while the Treasury Department’s announcement provides short-term relief, Miana does not believe it changes the outlook for long-term yields. “The key drivers behind rising yields … remain in place,” he says. “Until investors gain greater clarity on those issues, risks to long-term Treasury yields remain skewed to the upside.”
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As for stocks, the blue-chip Dow Jones Industrial Average rose 0.2% to 53,463, the broader S&P 500 gained 0.2% to 7,707, and the tech-heavy Nasdaq Composite added 0.2% to 26,331.
Merck, Moderna stocks soar on positive cancer drug data
Merck (MRK) was easily the best Dow Jones stock today, surging 12.6% — its best day since 2009 — after a new mRNA skin cancer treatment jointly developed by the drugmaker and Moderna (MRNA) met its goals in a late-stage study when paired with MRK’s Keytruda.
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“This represents the first positive Phase 3 readout for an individualized neoantigen therapy (INT) and for an mRNA-based cancer therapy, as well as the first Phase 3 study to demonstrate a clinically meaningful improvement over KEYTRUDA alone, a standard-of-care immunotherapy, in the adjuvant setting for patients with resected melanoma,” Merck stated in a news release.
