The main U.S. stock market indexes closed modestly higher on Wednesday, 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 U.S. 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 U.S. central bank’s 2 percent target.
But a day after the yield on the 30-year Treasury bond hit its highest level since 2007, the yield fell on Wednesday along with the 10-year Treasury yield. The moves came after the U.S. 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 Tuesday. 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 centers 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 percent, to 53,463.05, the S&P 500 gained 16.22 points, or 0.21 percent, to 7,707.98 and the Nasdaq Composite gained 41.38 points, or 0.16 percent, to 26,331.09.
Moderna’s shares surged almost 177 percent, leading S&P 500 gainers in a record rally for the company after it announced that its personalized mRNA cancer therapy developed with Merck cut the risk of melanoma recurrence and spread in a late-stage trial. Merck shares jumped 12.6 percent 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 percent, and U.S.-listed shares of BioNTech, which vaulted 22 percent.
The S&P 500 health care sector closed up 3.5 percent, 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 percent.
The second-biggest sector gainer was consumer discretionary, which added 2 percent.
The S&P 500 industrials index led percentage losses among the benchmark’s industry indexes with a 0.9 percent decline. The S&P 500 information technology index was the next-biggest loser, down 0.7 percent, with pressure from chip stocks.