S&P500: Treasury Buyback Lifts US Stocks as Moderna Cancer Data Sparks Rally

Treasury Buyback and a Cancer Vaccine Win Gave Stocks Two Reasons to Open Higher

The stock market caught a bid Wednesday from two directions that have nothing to do with each other. Treasury announced it will at least double the size of its longer-dated debt buybacks, and long yields dropped immediately from Tuesday’s extremes. The 30-year fell almost 9 basis points. That gave growth stocks the relief they needed after three sessions of selling driven by the long end of the curve.

Moderna surged after its personalized cancer vaccine with Merck produced positive late-stage melanoma results. Marvell jumped on a Google deal tied to tensor processing units.

FOMC minutes arrive later today. The bond market gave stocks a break this morning. The Fed decides whether it lasts.

The Dow Jones Industrial Average added about 281 points or 0.53%. The S&P 500 and Nasdaq Composite were also up.

Treasury Gave the Long Bond a Buyer It Did Not Have Tuesday

Treasury will raise the maximum size of its buyback operations from $2 billion to at least $4 billion, focusing on the 10- to 20-year and 20- to 30-year sectors where the buyers’ strike has been most visible. The program begins September 9 and runs through November 4.

The 30-year yield fell nearly 9 basis points to 5.196%. The 10-year dropped about 6 basis points to 4.647%. Stocks caught a bid because the part of the curve that was doing the damage on Tuesday is the same part getting the support on Wednesday.

After surging to a 19-year high earlier in the week at 5.337%, the U.S. 30-year Treasury yield is taking a beating today, down 8.8 basis points, or 1.66%. The move has put the yield in a position to test its lowest level since August 13 at 5.182%.

A trade through 5.182 will change the main trend to down. This could lead to further downside pressure, with the 50-day moving average at 5.086% the first major target.

Moderna’s Cancer Vaccine Data Changed the Stock Overnight

Moderna surged more than 80% Wednesday. Merck gained more than 7%. Their personalized cancer vaccine met the primary endpoint in a late-stage melanoma trial of more than 1,100 patients. The combination with Merck’s Keytruda extended the time patients lived without the melanoma returning, reducing the risk of the cancer spreading to distant parts of the body.

The trial is still continuing. The companies have not said when they will apply for U.S. approval. Additional trials in lung, bladder and kidney cancers are running. The market is buying the size of the opportunity after an 80% move. The regulatory process is not finished.

Moderna gapped higher on Wednesday, taking out its July 6 main top at $85.60 and its long-term retracement zone at $96.38 to $113.86. These levels are new support.

Today’s huge gains may have created the momentum needed to return to the May 24, 2024, all-time high at $170.47.

Marvell’s Google Deal Brought Chip Buyers Back After Tuesday’s Selling

Marvell Technology added more than 12% after announcing a deal with Google tied to tensor processing units. Google received a warrant to buy nearly 59 million Marvell shares as part of the agreement. The deal reinforced the part of the AI trade that has continued to work.

Stocks in the News

Analog Devices added more than 3% after earnings, revenue and guidance beat expectations. Lowe’s fell about 2% after revenue missed and the company moved its full-year outlook to the lower end. Toll Brothers rose after beating on earnings and revenue. Target slipped despite better-than-expected revenue after a tariff-refund benefit boosted net earnings.

Daily S&P 500 Index (SPX) Technical Analysis

The S&P 500 Index is edging higher early Wednesday as traders attempt to claw back this week’s losses. The trade has been mixed so far this week, with the main trend up but the minor trend down.

A trade through 7816.70 will signal a resumption of the uptrend. The nearest main bottom is 7313.92, so the main uptrend is safe for now.

The minor trend turned down on Tuesday, shifting momentum to the downside. A trade through 7688.63 will reaffirm the minor downtrend.

The new minor range is 7816.70 to 7688.63. Its 50% level at 7752.67 is today’s objective. Overtaking it will put the index in a position to challenge the record high.

If 7688.63 fails as support, selling pressure could increase with potential objectives at the former all-time high at 7620.90 and a 50% level at 7565.31. The 50-day moving average at 7527.14 is also major support.

What to Watch

The Treasury announcement changed the opening but it did not change the fiscal math. The buyback program starts September 9, and traders will be watching whether the 30-year holds near 5.196% once the operation becomes real after coming down from 5.33% on the news alone. FOMC minutes later today are the next force that can move yields and the dollar. Three officials voted for a hike in July and the minutes tell the market how close the rest of the committee was to joining them.

Moderna up 80% on one trial readout and Marvell up 12% on a Google deal are individual catalysts, not broad market drivers. The long bond gave stocks a break this morning, but the S&P is trying to claw back three sessions of losses with the minor trend still pointed down and the record high overhead.

More Information in our Economic Calendar.