US stocks edged higher Wednesday as the US Treasury Department said it could increase its purchases of government bonds, easing pressure that has weighed on financial markets and snapping a three-session decline. According to Business Today, the S&P 500 gained 0.3%, putting it on course for its first advance in four sessions after reaching a record high last week. The Dow Jones Industrial Average rose 65 points, or 0.1%, while the Nasdaq composite added 0.2%, as of 9:35 a.m. Eastern time.
Treasury yields fall after bond-purchase plan
Stocks have faced increasing pressure in recent sessions as concerns over inflation, mounting government debt and other factors pushed Treasury yields higher, Business Today reported, citing an AP report. Rising yields increase borrowing costs across the economy and can also weigh on valuations of stocks and other investments.
Treasury yields moved lower Wednesday morning after the Treasury Department announced plans to at least double its intended purchases of longer-dated Treasury securities. The department said the move was aimed:
To provide greater liquidity support in longer-dated nominal sectors where there is consistent strong sponsorship from market participants. — US Treasury Department
The yield on the 10-year Treasury fell to 4.65% from 4.71% at the end of Tuesday's session, a significant move in the bond market, according to Business Today. Despite the decline, the yield remains considerably above the 3.97% level recorded before the war with Iran pushed oil prices and concerns over inflation higher. The 30-year Treasury yield, which recently reached its highest level since 2007, declined more sharply, falling to 5.20% from 5.28% late Tuesday.
| Asset | Move / Level |
|---|---|
| S&P 500 | +0.3% |
| Dow Jones Industrial Average | +65 points (+0.1%) |
| Nasdaq composite | +0.2% |
| 10-year Treasury yield | 4.65%, down from 4.71% |
| 30-year Treasury yield | 5.20%, down from 5.28% |
Corporate earnings support the rebound
The steady stream of US companies reporting stronger-than-expected spring-quarter profits has continued to provide support to the broader stock market, Business Today reported.
Moderna and Merck were among the stocks helping lift the market after the companies reported positive results from a study involving a cancer vaccine they jointly developed. The treatment produced better recurrence-free survival among melanoma patients who received it alongside Keytruda, Merck's prescription immunotherapy drug, compared with patients treated with Keytruda alone.
Moderna shares surged 89.5%, while Merck gained 9.7%.
Estee Lauder jumped 15.7% after CEO Stéphane de La Faverie said a key indicator of revenue growth had accelerated for the fourth consecutive quarter. The company recorded higher revenue across its global markets, with mainland China delivering the strongest growth. The skincare company posted earnings of 39 cents per share after excluding certain restructuring costs and other one-time expenses, compared with 9 cents a share a year earlier and exceeding the 32 cents analysts had expected, according to FactSet.
Target gained 4.5%, Lowe's advanced 1% and homebuilder Toll Brothers climbed 7.1% after each company reported quarterly profits that came in above analysts' expectations.
Such earnings growth is important because stock valuations tend to move in line with corporate profits over the longer term, Business Today reported. Strong results also help counter concerns that share prices have risen too far during their run to record levels.
Asia-Pacific markets weaken
Stock markets outside the US were mostly weaker across Asia and Europe, Business Today reported. Tokyo's Nikkei 225 dropped 3.2% as higher bond yields added to selling pressure on technology shares, pulling the benchmark lower. South Korea's Kospi fell 5.8%, an index that has experienced some of the world's biggest swings because of its heavy exposure to artificial intelligence stocks.
The US market's rebound stands in contrast to declines in Asia, where Tokyo's Nikkei 225 fell 3.2% and South Korea's Kospi dropped 5.8%. Even after Wednesday's decline, the 10-year Treasury yield remains considerably above the 3.97% level recorded before the war with Iran pushed oil prices and inflation concerns higher, according to Business Today.
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