U.S. stock indexes declined on Thursday as Walmart’s quarterly earnings miss and rising oil prices weighed on investor sentiment, while Treasury yields climbed despite government bond repurchase efforts.
Walmart shares fell 9.2% after the retail giant reported weaker-than-expected comparable sales growth, attributing the decline to elevated gasoline prices that dampened consumer spending. The drop in Walmart’s stock pulled down the S&P 500 consumer staples and discretionary sectors, with rival retailers such as Costco, Dollar Tree, and Albertsons also declining between 1% and 2.6%.
Oil prices surged above $87 per barrel on Thursday, driven by geopolitical concerns after reports that the Trump administration discussed escalating economic measures against Iran. The rise in crude prices intensified inflation concerns and raised questions about the resilience of the U.S. consumer, following recent weaker-than-expected retail sales and labor market data for July.
Market Reaction to Rising Bond Yields
Treasury yields on the 10-year and 30-year bonds climbed despite the U.S. Treasury Department’s announcement on Wednesday that it would increase bond repurchases to curb the recent surge in yields. The move had briefly eased yields on Wednesday, but they resumed their upward trend on Thursday.
Investment strategists noted that the rise in bond yields was a key headwind for equities, as higher yields reduce the attractiveness of stocks relative to fixed-income assets. Mona Mahajan, head of investment strategy at Edward Jones, stated, “There are a couple of headwinds that the markets woke up to today. One was a resumption in the increase in bond yields across the curve that came despite yesterday’s Treasury move.”
Jeff Marks, portfolio director for the CNBC Investing Club, echoed this sentiment, saying, “We have oil and rates higher. That’s complicating the picture.” He added that Walmart’s earnings miss contributed to broader concerns about consumer spending trends.
Sector-Specific Movements and Corporate Developments
While consumer-focused stocks declined, memory chip manufacturer Micron gained over 2% amid strength in the broader memory sector. The rally followed reports that Samsung plans to announce a $72 billion shareholder return policy, following similar moves by SK Hynix, which announced a $29 billion stock buyback. Analysts attributed the sector’s gains to cash-rich companies benefiting from the AI-driven chip supercycle.
In contrast, cybersecurity stocks declined, with CrowdStrike falling over 4% after its CTO Elia Zaitsev announced plans to leave the company to launch an AI-focused venture fund. Palo Alto Networks also dropped more than 2%, though analysts described the declines as short-term noise, noting that both stocks had rallied significantly earlier in the summer.
Broader Economic Context
The market’s decline on Thursday followed a modest gain on Wednesday, when the Treasury’s bond repurchase announcement had briefly lowered long-term yields and strengthened the dollar. However, the resumption of rising oil prices and bond yields reversed those gains, reinforcing concerns about inflationary pressures and consumer spending.
Investors also pointed to recent economic data suggesting a potential slowdown in consumer activity. Retail sales and labor market figures for July had already raised questions about the economy’s strength, and the combination of higher gasoline prices and rising yields added to the cautious outlook.
Dow Jones futures, S&P 500 futures, and Nasdaq futures all fell early Thursday, reflecting the broader market sentiment. Meanwhile, biotech and drugmaker stocks rallied on positive news from Moderna and Merck regarding cancer vaccine developments, providing a counterbalance to the broader declines.