NEW YORK – The main US stock market indexes closed modestly higher on Aug 19, as easing government bond yields boosted risk appetites while a dramatic rally in shares of vaccine-maker Moderna drove gains in the health-care sector.
Investors barely reacted to minutes from the US Federal Reserve’s July meeting, which showed deepening concern about inflation with “several” policymakers ready to raise interest rates.
“Many” said a rate hike would be needed if inflation does not decline to the US central bank’s 2 per cent target.
But a day after the yield on the 30-year Treasury bond hit its highest level since 2007, the yield fell on Aug 19 along with the 10-year Treasury yield.
The moves came after the US Treasury announced it would double the size of liquidity support buyback operations for longer-dated bonds.
“The risk-on trade is trying to hang on to the lifeline that Treasury Secretary Bessent sent,” said Carol Schleif, chief market strategist at BMO Private Wealth, noting that riskier assets including high-profile technology stocks had sold off in recent days as bond yields rose.
Concerns over ballooning government debt and rising inflation had pushed global bond yields to multi-decade highs on Aug 18.
Schleif said investors were relieved by the government support as higher rates “could potentially impact the AI trade” as technology companies have been issuing debt and equity and using their own cash to fund construction of data centres supporting AI.
However, equity indexes pared gains as the session wore on.
Jim Baird, chief investment officer at Plante Moran Financial Advisors, said investors likely took some profits after the initial rally and he added that the morning’s announcement “doesn’t mean that the longer-term issue of higher rates is off the table.”
The Dow Jones Industrial Average rose 119.65 points, or 0.22 per cent, to 53,463.05, the S&P 500 gained 16.22 points, or 0.21 per cent, to 7,707.98 and the Nasdaq Composite gained 41.38 points, or 0.16 per cent, to 26,331.09.
Moderna’s shares surged almost 177 per cent, leading S&P 500 gainers in a record rally for the company after it announced that its personalised mRNA cancer therapy developed with Merck cut the risk of melanoma recurrence and spread in a late-stage trial.
Merck shares jumped 12.6 per cent and it was the biggest percentage gainer in the blue-chip Dow and the third-biggest in the S&P 500.
Moderna’s blistering rally boosted healthcare peers such as Novavax , which finished up 10.8 per cent, and US-listed shares of BioNTech, which vaulted 22 per cent.
The S&P 500 healthcare sector closed up 3.5 per cent, marking its biggest one-day percentage gain since April 2025.
The sector also hit a record high and provided the biggest boost to the S&P 500 from any of its 11 major industry sectors.
The Nasdaq biotechnology index also jumped 6.4 per cent.
The second-biggest sector gainer was consumer discretionary, which added 2 per cent.
The S&P 500 industrials index led percentage losses among the benchmark’s industry indexes with a 0.9 per cent decline.
The S&P 500 information technology index was the next-biggest loser, down 0.7 per cent, with pressure from chip stocks.
However, Marvell Technologies shares jumped 9.9 per cent after it said it will help develop Google’s in-demand custom chips and has offered the search giant the right to buy a potential US$12.2 billion stake.
Marvell was one of the few gainers in the volatile Philadelphia semiconductor index, which ended down 2 per cent.
Google parent Alphabet’s shares finished up 0.2 per cent.
On the earnings front, Target shares rose 4.3 per cent after the retailer raised its annual sales forecast.
Lowe’s shares gained 2 per cent even after it trimmed its annual sales growth forecast.
Estee Lauder shares jumped 16.3 per cent, making it the S&P 500‘s second-biggest percentage gainer, after the cosmetics maker forecast annual profit above Wall Street estimates.
Brent crude futures settled higher with Middle East progress still unclear.
US President Donald Trump said no talks were taking place with Iran and insisted the Strait of Hormuz was open, contradicting Iran’s assertion that the strait remained shut to shipping.
Advancing issues outnumbered decliners by a 1.9-to-1 ratio on the NYSE, where there were 263 new highs and 93 new lows.
On the Nasdaq, 2,855 stocks rose and 1,967 fell as advancing issues outnumbered decliners by a 1.45-to-1 ratio.
The S&P 500 posted 18 new 52-week highs and no new lows while the Nasdaq Composite recorded 106 new highs and 89 new lows.
On US exchanges 16.92 billion shares changed hands compared with the 16.96 billion moving average for the last 20 sessions. REUTERS
