The S&P 500 ended a three-day losing streak on Wednesday, with bond yields declining after the Treasury Department announced an increase in its buyback operations for longer-term debt. The broad market index advanced 0.21% to close at 7,707.98, while the Nasdaq Composite gained 0.16% to 26,331.09. The Dow Jones Industrial Average added 119.65 points, or 0.22%, settling at 53,463.05.
The rally’s momentum decreased throughout the session, after the Dow had initially climbed over 360 points, or 0.7%, at its peak. The S&P 500 was up 0.7% at its highest point, and the Nasdaq saw a 0.6% increase.
Stocks initially surged as yields on the long end of the Treasury curve fell. The Treasury Department stated it would at least double the size of its government debt repurchases, targeting the 10- to 30-year parts of the market, including 20-year debt. The 30-year Treasury bond yield, which had reached a 19-year high of over 5.33% the previous trading day, declined more than 10 basis points to 5.184%. The 10-year Treasury note yield dropped over 6 basis points to 4.637%.
Companies typically benefiting from lower rates saw gains, with Lowe’s and Home Depot both increasing by approximately 2%. Massimo Santicchia, head of U.S. equities at Procyon, noted that value names performed well, indicating a strong economy and corporate earnings cycle, despite market tension from higher capital costs due to increased yields. Santicchia maintained that the solid earnings outlook still creates a very favorable environment for stocks.
Moderna’s shares more than doubled, soaring about 177% for its best day on record, after an experimental skin cancer vaccine developed with Merck showed positive results in a late-stage trial. Merck shares also jumped over 12%, supporting the Dow. Marvell Technology gained almost 10% following an agreement with Google related to its tensor processing units and issuing Alphabet a warrant to purchase up to $12.2 billion worth of Marvell common stock.
Conversely, some tech stocks declined after reports indicated that OpenAI’s second-quarter results disappointed investors, with revenue expanding by 18% but losses also growing. Broadcom fell over 4%, Advanced Micro Devices shed nearly 4%, and the iShares AI Innovation and Tech Active ETF (BAI) dropped approximately 2%.
On Tuesday, major U.S. stock averages fell as sovereign bond yields globally reached multi-year highs, partly due to inflation concerns. The 30-year Treasury yield hit a new 19-year high, while Japan’s 10-year bond yield reached a three-decade high. Rates on France’s 30-year bond were the highest since 2008, and the German 30-year bund yield reached its highest point since 2011.
Federal Reserve officials indicated in their latest meeting minutes that higher rates might be necessary if inflation does not ease. At the July meeting, three dissenters voted to increase rates.
Ben Emons, investing chief at Fed Watch Advisors, noted investor confusion regarding the Treasury Department’s debt buyback announcement, with some interpreting it as quantitative easing or yield curve control. Emons clarified that Treasury buybacks are liquidity housekeeping, retiring older issues and replacing them with new ones, not an outright purchase program that creates money supply. However, he suggested this interpretation could explain the flattening of the yield curve between the 2-year and 30-year U.S. Treasury yields.
Currency strategists warned of potential pressure on the U.S. dollar due to growing fiscal risks, softer economic data, and Federal Reserve policy uncertainty. The U.S. Dollar Index registered 98.8 on Wednesday. Charu Chanana, chief investment strategist at Saxo, explained that higher Treasury yields do not necessarily bolster the dollar if investors perceive the increase as reflecting fiscal risk, increased government borrowing, or persistent inflation, rather than stronger U.S. growth or tighter Fed policy. Societe Generale noted that weaker consumption, inflation, and employment data have also weakened the case for bullish dollar positions.
JPMorgan downgraded Cogent Communications to underweight from neutral, citing concerns about execution and increased leverage. Analyst Sebastiano Petti highlighted the company’s elevated leverage of 6.75x and negative free cash flow, stating there was no clear path to its 4.0x target even with continued asset sales.
Cryptocurrency prices climbed after the Treasury Department’s announcement of increased longer-term debt buybacks. Bitcoin jumped over 5% to trade above $68,600, Ether traded 8% higher at $2,072, and Solana popped 5% to over $81. Shares of companies tied to digital assets also surged, with Coinbase advancing 10%, Mara Holdings gaining 7%, and Riot Platforms increasing almost 1%.
Gold prices surged on Wednesday, with gold futures for December delivery rising as high as $4,557.60 per troy ounce, their highest level since June 2. Gold-mining stocks, including Kinross Gold, Agnico Eagle Mines, and Newmont, rallied. The rally extended to other precious metals, with silver, platinum, and palladium futures also climbing.
JPMorgan reiterated overweight ratings on Array Digital Infrastructure and Telephone & Data Systems, setting price targets of $45 and $48, respectively. Analyst Sebastiano Petti cited continued value-unlock at Array Digital, including spectrum sales and potential wireless partnership monetization, alongside an accelerating fiber build and improving broadband performance at Telephone & Data Systems. Petti also anticipated potential catalysts such as a spectrum sale and the resumption of Telephone & Data Systems’ buyback. Shares of Array Digital are down nearly 34% year to date, and Telephone & Data Systems has fallen over 15% in the same period.
JPMorgan downgraded Klarna to Neutral from Overweight, lowering its price target to $18 from $22. Analyst Connor Allen cited a lack of clear visibility into medium-term trends and a weaker view of the European macro environment, particularly Germany, due to slowed consumer discretionary spending. Allen believes it will take longer to rebuild investor credibility.
Morgan Stanley upgraded Honeywell Aerospace to overweight from equal weight, with a price target of $205. Analyst Kristine Liwag noted that while fundamental concerns regarding revenue and EBIT growth, margin expansion, and free cash flow conversion persist, the current valuation more than compensates for these risks. Shares of Honeywell Aerospace have fallen approximately 24% in the past month.
Target declined 1.5% despite reporting better-than-expected second-quarter revenues and raising its full-year guidance, boosted by a $752 million increase in net earnings from tariff refunds. Estee Lauder rose over 7% after reporting earnings and revenue that beat consensus estimates for its fiscal fourth quarter. Analog Devices rose over 3% after adjusted earnings and revenue for its fiscal third quarter, along with current quarter guidance, exceeded expectations.
Lowe’s shares were down nearly 2% after the company issued a lackluster full-year revenue and earnings guidance, with mixed second-quarter results.
Oracle slipped nearly 1% in premarket trading after reports of OpenAI’s disappointing second-quarter results. Alphabet, Marvell, and Intel shares were also lower.
Oil prices edged higher amid conflicting signals from Tehran and Washington regarding the Strait of Hormuz. Brent crude futures rose 0.7% to $91.66 a barrel, and U.S. West Texas Intermediate crude gained 0.86% to $85.67 per barrel. President Donald Trump stated that no talks were underway with Iran and maintained that the Strait of Hormuz was open, contradicting Tehran’s claim that the key shipping route remained closed.
China’s Unitree Robotics surged 629.4% in its Shanghai trading debut, raising about 6.1 billion yuan ($905 million) in its IPO. The company’s existing investors include Chinese AI company DeepSeek and tech giant Tencent.
Samsung Electronics announced an investment of approximately 240 billion won ($158 million) to build a heating, ventilation, and air conditioning (HVAC) production line in Gwangju, South Korea. The investment targets the growing HVAC market, including advanced cooling solutions for AI data centers. Samsung’s shares fell over 5% in early trading in Seoul amid a broader decline in tech stocks.
Asian technology stocks fell, tracking their U.S. peers. In Japan, SoftBank Group dropped 5.44%, Tokyo Electron was 3.85% lower, Advantest lost 3.93%, and Kioxia declined 9.13%. In South Korea, SK Hynix fell 8.66%, Samsung Electronics slipped 7.08%, and Seoul Semiconductor declined 4.33%.
U.S. government debt yields continued to climb, with longer-dated debt particularly affected, pushing the 30-year bond yield near its highest level since the early 21st century. Factors contributing to rising financing costs include intensified concerns over a budget deficit, inflation remaining above the Federal Reserve’s 2% target, and corporate debt issuance competing with Treasurys. The move can also be attributed to a rising term premium, which is the extra yield investors demand to hold U.S. debt.
