US stocks halt their slide after the Treasury Department moves to ease
pressure from the bond market
[August 20, 2026] By
STAN CHOE
NEW YORK (AP) — U.S. stocks rose Wednesday after the U.S. Treasury
Department announced a move that could ease pressure coming from the
bond market. Strong profit reports for the spring from Estee Lauder,
Target and other U.S. companies also helped support Wall Street.
The S&P 500 climbed 0.2% for its first gain in four days after setting
its all-time high last week. The Dow Jones Industrial Average added 119
points, or 0.2%, and the Nasdaq composite ticked 0.2% higher.
Financial markets have come under growing strain as Treasury yields
charged higher through the summer on worries about inflation, big
government debts and other factors. That makes borrowing money more
expensive for everyone, which slows the economy and undercuts prices for
stocks and other investments.
But Treasury yields fell in the morning after the U.S. Treasury
Department said it will at least double the size of its planned
purchases of longer-term Treasurys from Sept. 9 through Nov. 4. The
department said it’s doing so “to provide greater liquidity support in
longer-dated nominal sectors where there is consistent strong
sponsorship from market participants.”
These longer-term 10- and 30-year Treasurys are less beholden to the
Federal Reserve, which can raise or lower very short-term interest rates
for overnight loans. President Donald Trump has lobbied for the Fed to
lower interest rates to help the economy.
Longer-term yields are set instead by investors in the bond market, who
decide how much interest they need to get paid by the U.S. government in
exchange for lending it money. And recently, they have been demanding
more in interest to make up for the growing risks of high inflation,
continued government deficits and other factors.
After the Treasury department’s announcement, the yield on the 10-year
Treasury fell to 4.64% from 4.71% late Tuesday. It, though, remains well
above its 3.97% level from before the war with Iran sent oil prices and
worries about inflation much higher.
The 30-year Treasury yield, which recently touched its highest level
since 2007, fell more sharply to 5.18% from 5.28% late Tuesday.
The relief could be short lived, some analysts warn. The amount of bonds
the U.S. Treasury is proposing to repurchase is a fraction of the
overall total.
“The boost to buybacks is also happening in a world of challenged Fed
credibility,” according to strategists at BNP Paribas. Investors are
questioning whether the Federal Reserve will raise the federal funds
rate soon to match the tough talk its chairman, Kevin Warsh, has been
offering on getting inflation down toward its 2% target.
“We do not believe buybacks will be enough to offset a continued loss in
Fed credibility,” the BNP Paribas strategists wrote in a report, calling
them “necessary, but not sufficient.”
On Wall Street, Moderna and Merck helped lead the market after they
announced encouraging initial results from a study of a cancer vaccine
they co-developed. The new drug showed better recurrence-free survival
in melanoma patients who had a combination of it and Keytruda, a
prescription immunotherapy drug made by Merck, than with Keytruda alone.
[to top of second column] |
Specialist Gregg Maloney works on the floor of the New York Stock
Exchange, Monday, Aug. 17, 2026, in New York. (AP Photo/Yuki Iwamura)
 Moderna soared 177%, while Merck
jumped 12.6%.
The continuing parade of U.S. companies reporting bigger profits for
the spring than analysts expected, meanwhile, continues to support
stocks.
Estee Lauder rallied 16.3% after CEO Stéphane de La Faverie said a
key measure of its revenue growth accelerated for a fourth straight
quarter. It reported growth in revenue around the world, with the
strongest in mainland China.
The skin care company reported earnings per share of 39 cents, after
excluding some restructuring and other one-time expenses. That’s up
from just 9 cents a year earlier and was better than the 32 cents
that analysts expected, according to FactSet.
Such growth is imperative because stock prices tend to follow the
path of corporate profits over the long term. And strong growth
helps allay criticism that stock prices shot too high in their runs
to records.
Target rose 4.3%, Lowe’s added 2% and homebuilder Toll Brothers
climbed 4% after they all reported better profits for the latest
quarter than expected.
They helped offset drops for some Big Tech stocks, which restrained
the overall market.
Broadcom fell 4.6% and was the heaviest weight on the S&P 500. It
and other winners of the artificial-intelligence boom have been
swingingsharply through the summer on worries that their stocks may
have shot too high and that the AI frenzy may not be sustainable if
it doesn’t produce big-enough profits.
All told, the S&P 500 rose 16.22 points to 7,707.98. The Dow Jones
Industrial Average climbed 119.65 to 53,463.05, and the Nasdaq
composite added 41.38 to 26,331.09.
In stock markets abroad, indexes were mostly lower in Asia and mixed
in Europe.
Tokyo’s Nikkei 225 sank 3.2%. South Korea’s Kospi, which has been
home to some of the world’s sharpest swings because of its heavy
reliance on AI stocks, slumped 5.8%.
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AP Writers Michelle Chapman, Chan Ho-him, Mike Stobbe and Elaine
Kurtenbach contributed to this report.
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