S&P 500 gains 0.2% as Treasury buyback expansion eases yields

The S&P 500 rose 0.2 percent to 7,707.98 after the Treasury doubled buybacks of longer-term bonds, easing pressure on yields.

"The boost to buybacks is also happening in a world of challenged Fed credibility," strategists at BNP Paribas wrote in a report, calling the expansion "necessary, but not sufficient" to offset continued losses in Fed credibility.

The 30-year Treasury yield fell about nine basis points to 5.195 percent, retreating from a 19-year high above 5.33 percent hit a day earlier. The 10-year yield declined more than five basis points to 4.653 percent, though it remains well above the 3.97 percent level from before the war with Iran sent oil prices and inflation worries higher. Home improvement retailers led gains, with Lowe's up about 2 percent and Home Depot rising more than 2 percent. Moderna soared 176 percent — its strongest session ever — after a skin cancer vaccine developed with Merck showed positive late-stage trial results, while Merck jumped 12 percent. Marvell Technology climbed 10 percent on an AI chip agreement with Google that includes a warrant for Alphabet to purchase up to $12.2 billion of shares. Broadcom and Advanced Micro Devices fell about 3.7 percent following reports that OpenAI's second-quarter losses widened. The VIX, known as the "fear index," fell 6 percent to 14.89.

The Treasury's expanded repurchase program, covering maturities between 10 and 30 years, takes effect Sept. 9 and runs through Nov. 4. The move aims to provide liquidity support in longer-dated sectors where yields have climbed to multi-year highs, but BNP Paribas cautioned that the buyback size remains a fraction of the overall market. Minutes from the Federal Reserve's July meeting showed officials saw scope for higher interest rates if inflation fails to ease, keeping the path of long-term yields — and equity valuations — uncertain. Spot gold broke above $4,517 per ounce, reflecting renewed appetite for non-yielding assets as yields retreated.

European Stocks Slip as Banking, Defense Weigh

European stock exchanges closed mostly lower Wednesday, with the Stoxx 600 down 0.11 percent to 651.16, as weakness in banking and defense shares outweighed easing global bond yields. Germany's DAX slipped 0.14 percent to 26,091.33, France's CAC 40 fell 0.09 percent to 8,501.91, and Spain's IBEX 35 dropped 0.44 percent to 19,847.50. Britain's FTSE 100 bucked the trend, rising 0.14 percent to 10,743.35, supported by mining shares.

In Asia, Tokyo's Nikkei 225 sank 3.2 percent and South Korea's Kospi slumped 5.8 percent, with the latter hit by its heavy reliance on AI stocks. SK Hynix announced a 40.43 trillion won ($28.3 billion) buyback plan to repurchase and cancel 24.07 million common shares, sending its U.S.-listed ADR up more than 5 percent.

Strong earnings continued to support the market. Estee Lauder rallied 16.4 percent after reporting EPS of 39 cents, up from 9 cents a year earlier and above the 32-cent consensus. Target rose 4.8 percent and homebuilder Toll Brothers climbed 6.9 percent after beating profit estimates. The Philadelphia Semiconductor Index rose nearly 1 percent, buoyed by the SK Hynix announcement and Marvell's Google deal.

This article is for informational purposes only and does not constitute investment advice.