Broader Market Rebounds as Health Care and Rate-Sensitive Stocks Overcome Semiconductor Weakness

Stocks finished modestly higher on Wednesday, but the relatively small gains in the major averages understated a much stronger performance beneath the surface. The S&P 500, Nasdaq Composite, and Dow Jones Industrial Average each gained 0.2%, while the S&P 500 Equal Weight Index climbed 1.0%, highlighting broad buying across rate-sensitive groups and stocks benefiting from company-specific catalysts.

The session received an early boost after the U.S. Department of the Treasury announced plans to at least double the size of its liquidity-support buyback operations for longer-dated nominal securities beginning September 9. The announcement offered some relief from elevated long-term Treasury yields, which have recently weighed on equities, and helped spark a rebound across some of the market’s most rate-sensitive areas.

Homebuilders were among the biggest beneficiaries, sending the iShares U.S. Home Construction ETF 3.1% higher. Strength across retailers and mega-cap stocks provided additional support to the consumer discretionary sector (+2.1%). Target (TGT 159.03, +6.56, +4.30%) and Lowe’s (LOW 220.71, +5.07, +2.35%) advanced following their earnings reports, while Amazon (AMZN 265.84, +6.39, +2.46%) and Tesla (TSLA 351.12, +14.25, +4.23%) rebounded from recent weakness.

Health care (+3.5%) was the clear sector leader following positive results for an experimental cancer vaccine from Moderna (MRNA 174.38, +111.42, +176.97%) and Merck (MRK 152.22, +17.05, +12.61%). Moderna more than doubled in value, while Merck posted a double-digit gain, helping propel the iShares Biotechnology ETF 6.6% higher and making biotechnology one of the session’s strongest areas.

Materials (+1.7%) also stood out as higher precious metals prices supported mining stocks. Newmont Corporation (NEM 125.08, +9.10, +7.85%) was among the group’s strongest performers as investors continued to favor commodity-linked names.

Seven of the 11 S&P 500 sectors ultimately finished higher, reinforcing the strength of participation beneath the modest index-level advance. The divergence between the equal-weight and market-cap-weighted benchmarks was largely attributable to continued weakness in semiconductor stocks.

The PHLX Semiconductor Index fell another 2.1%, extending Tuesday’s steep decline and weighing heavily on the information technology sector (-0.7%). Semiconductor-related electrical equipment companies also remained under pressure, contributing to the industrials sector’s 0.9% decline.

The continued weakness in chipmakers stood in sharp contrast to strength elsewhere in the market. After semiconductors and other momentum-oriented stocks drove Tuesday’s broad selloff, Wednesday brought a more pronounced rotation into rate-sensitive, defensive, biotechnology, consumer, and materials stocks.

Investors also digested the afternoon release of the FOMC minutes, which provided a reminder that additional monetary tightening remains a possibility. Most participants supported leaving interest rates unchanged at the latest meeting, although several favored a 25-basis-point increase. Many officials also judged that further tightening could become necessary if inflation fails to continue moving lower.

Higher oil prices provided another potential headwind, but they did little to disrupt the broader advance. WTI crude futures settled $0.80 higher, or 0.9%, at $85.68 per barrel, extending their recent climb amid persistent geopolitical uncertainty.

Wednesday’s session ultimately offered encouraging evidence of broader market participation following the technology-driven weakness earlier in the week. Rate-sensitive stocks, health care, materials, and several earnings-related movers provided strong leadership, allowing the equal-weight S&P 500 to substantially outperform.

Semiconductors remained a significant drag and continued to restrain the headline indices, but the ability of other areas of the market to absorb that weakness left the overall tone considerably stronger than the S&P 500’s modest 0.2% gain might suggest.

Our FTinvest 11 model portfolio rebounded strongly, gaining 1.63% to close at 1,074.36, more than reversing the declines recorded over the previous two sessions. The advance brings the portfolio back toward the upper end of its recent trading range and leaves it just approximately 2.0% below its all-time closing high of 1,096.33.

FTinvest 11 is now up approximately +15.75% year-to-date, restoring a substantial portion of the gains surrendered during the recent consolidation. Today’s strong rebound brings the portfolio back within close reach of record territory and highlights its resilience following short-term periods of weakness. With a robust double-digit gain maintained for 2026, FTInvest 11 continues to follow its disciplined, value-driven investment strategy with a long-term focus on capital appreciation.