Wall Street Rises; Yield Drop Offsets Tech Sector Pressure
Wall Street traded mostly higher on Wednesday (August 19) as a decline in US Treasury yields helped bolster market sentiment. The S&P 500 rose approximately 0.3% to 7,717.84, the Nasdaq Composite gained 0.2% to 26,347.78, and the Dow Jones added 0.2% to 53,453.94.
Positive sentiment stemmed largely from the bond market after the US Treasury Department announced it would double buyback operations for long-term Treasuries. Starting September 9, the size of buybacks for 10–20 year and 20–30 year debt securities will increase from US$2 billion to US$4 billion per operation, helping to push the 30-year yield down from near two-decade highs.
However, technology stocks saw relatively limited movement. Marvell Technology rose after announcing a partnership with Alphabet’s Google to develop custom semiconductor products, yet this gain was insufficient to lift the chip sector as a whole; the Philadelphia Semiconductor Index remained largely flat.
The market also scrutinized the minutes from the July FOMC meeting, which revealed that many Federal Reserve officials still see the possibility of interest rate hikes if inflation fails to decline. At that meeting, the majority of officials voted to maintain interest rates, while three regional Fed presidents supported a hike.
The minutes also highlighted concerns that inflation remains elevated. Several officials assessed that an escalation in Middle East conflicts could prolong supply chain disruptions and drive up price pressures, meaning inflation risks remain skewed to the upside, even as recent economic data show signs of weakening.
Newsmaker Analysis: Wall Street is currently supported by falling Treasury yields, but the scope for gains remains constrained by the FOMC's relatively hawkish tone. If yields continue to fall, technology stocks could see greater room for a rebound. However, if the market begins to price in rate hikes again due to energy-related inflation risks, pressure on the Nasdaq and growth stocks could intensify once more.
Source: Newsmaker.id
