NEW YORK: The main US indexes rebounded on Wednesday after a steep tech selloff in the previous session as easing government bond yields boosted risk appetite, while markets assessed a flood of positive corporate updates including from vaccine-maker Moderna.
Moderna’s shares more than doubled after its personalized mRNA cancer therapy developed with Merck cut the risk of melanoma recurrence and spread in a late-stage trial.
Merck jumped 11.2 percent and was the biggest boost on the blue-chip Dow.
Biotech peers also gained. Novavax was up 6 percent while US-listed shares of BioNTech rallied 21 percent. The S&P 500 healthcare sector rose 2.9 percent to hit a record high, providing the biggest support to the benchmark index.
Information technology stocks on the S&P 500 were flat. Chipmaker Broadcom lost 4 percent after Marvell Technologies issued Alphabet’s Google a warrant to buy a stake worth about USD12.18 billion.
Marvell surged 9.8 percent, bucking the decline in chipmakers. The broader semiconductor index shed 1.3 percent.
“Most tech companies are priced mainly on forward earnings expectations, and when interest rates creep up, those expectations are worth less and the stocks are worth less,” said Robert Pavlik, senior portfolio manager at Dakota Wealth.
At 12:18 p.m. ET, the Dow Jones Industrial Average rose 218.24 points, or 0.41 percent, to 53,564.38, the S&P 500 gained 45.89 points, or 0.60 percent, to 7,737.65, and the Nasdaq Composite was up 156.02 points, or 0.59 percent, to 26,445.73.
The yield on the 30-year Treasury bond retreated from its highest level since 2007 after the US Treasury announced it would double the size of liquidity support buyback operations for longer-dated bonds. It was last at 5.203 percent.
Concerns over ballooning government debt and rising inflation pushed global bond yields to multi-decade highs on Tuesday, hitting risk assets, especially high-flying chip stocks that have taken US markets to record highs this year.
“Inflation does remain a concern and elevated oil prices are contributing to that. If the Federal Reserve is not going to do anything about it, the bond market will,” said Sam Stovall, chief investment strategist at CFRA Research.
Comments