U.S. stocks fell broadly Thursday as renewed pressure from rising Treasury yields combined with Walmart’s disappointing sales results and higher oil prices to deepen concerns about consumers, inflation and the economic outlook.
By yourNEWS Media Newsroom
Wall Street ended sharply lower Thursday as investors confronted a renewed rise in Treasury yields, disappointing results from Walmart and another increase in oil prices that added to concerns about inflation and the resilience of American consumers.
All three major U.S. stock indexes finished in negative territory.
Preliminary closing data showed the S&P 500 dropping 65.29 points, or 0.85%, to 7,642.69. The Nasdaq Composite fell 263.28 points, or 1.00%, to 26,067.81, while the Dow Jones Industrial Average suffered the largest percentage decline, losing 681.62 points, or 1.27%, to close at 52,781.43.
Several pressures converged during the session, reversing some of the optimism that had lifted equities Wednesday.
Treasury yields resumed their climb despite the federal government’s latest effort to ease pressure in the bond market, while U.S. crude oil moved above $87 per barrel. At the same time, Walmart’s quarterly report raised fresh questions about household spending as elevated gasoline prices continue absorbing a larger portion of consumers’ budgets.
Walmart shares fell sharply after the retail giant missed Wall Street expectations for quarterly comparable sales.
The company indicated that rising gasoline prices were prompting shoppers to pull back on spending, an important signal for markets because Walmart’s enormous customer base makes its performance a closely watched measure of consumer conditions.
The weakness spread to other retailers.
Costco, Dollar Tree and Albertsons declined alongside Walmart, while the S&P 500 consumer staples and consumer discretionary sectors came under pressure.
Mona Mahajan, head of investment strategy at Edward Jones, said the combination of higher gasoline prices and softer economic data was increasing uncertainty about how long consumers can continue absorbing higher costs.
“There is some question about how resilient the consumer can be with ongoing elevated gas prices and inflationary pressures,” Mahajan said.
Those concerns were already building before Walmart’s report.
Investors had been digesting weaker-than-expected retail sales and labor-market figures for July, leaving markets particularly sensitive to evidence that households may be cutting spending.
The renewed advance in energy prices added another complication.
U.S. crude climbed above $87 as oil prices rose for a fifth consecutive session amid stalled U.S.-Iran peace negotiations and disruptions to Middle Eastern supplies.
Higher energy costs can affect markets in several ways, raising expenses for businesses while increasing gasoline and transportation costs for consumers. They can also intensify inflation concerns at a time when investors are closely watching interest rates and bond markets.
Cruise operators were among companies hit particularly hard Thursday because of their exposure to fuel costs. Royal Caribbean Group and Carnival Corp. posted sizable percentage declines.
The consumer discretionary sector was one of the largest sources of downward pressure on the S&P 500. Amazon and Tesla, both major components of the sector because of their large market values, were among the stocks carrying significant index weight.
Energy stocks moved in the opposite direction.
The S&P 500 energy sector advanced as crude oil continued climbing, while real estate shares also outperformed the broader market.
Bond yields provided another major source of volatility.
Stocks had rallied Wednesday after the U.S. Treasury Department announced plans to spend more than twice the amount previously expected on bond repurchases, an effort intended to slow a surge in Treasury yields.
That relief proved short-lived.
On Thursday, yields moved higher again across the curve, restoring the pressure that had weighed on equities before Wednesday’s announcement.
“There are a couple of headwinds that the markets woke up to today,” Mahajan said. “One was a resumption in the increase in bond yields across the curve that came despite yesterday’s Treasury move … it reversed very quickly, within 24 hours.”
Yields on both 10-year and 30-year Treasury securities briefly pared their gains after Treasury Secretary Scott Bessent said the government could again increase the amount of bonds it repurchases.
The pullback did not last, however, and yields resumed moving higher.
Rising Treasury yields can make equities less attractive relative to government bonds while also increasing borrowing costs across the economy, creating additional pressure for businesses and consumers.
Despite the broad market decline, several individual stocks moved higher on company-specific developments.
Cryptocurrency-related companies rallied one day after President Donald Trump urged Congress to approve cryptocurrency legislation.
Shares of Strategy and cryptocurrency exchange Coinbase Global were among those advancing.
Deere also gained after the world’s largest farm-equipment manufacturer raised its full-year net income forecast.
Other companies suffered substantial declines following disappointing outlooks.
Coty shares sank after the owner of the CoverGirl cosmetics brand forecast current-quarter earnings below expectations and declined to provide a full-year outlook.
Advance Auto Parts also tumbled after the company issued a weaker annual sales forecast.
Moderna, meanwhile, surrendered much of the extraordinary advance it recorded Wednesday, when the biotechnology company’s stock had surged nearly 177%.
Thursday’s trading left investors balancing several competing signals: stronger oil and energy shares on one side and renewed concerns about consumers, inflation and interest rates on the other.
Walmart’s weaker-than-expected comparable sales intensified scrutiny of household spending just as gasoline prices are rising, while the rapid rebound in Treasury yields showed that Wednesday’s government bond-buyback announcement had provided only temporary relief to financial markets.
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