The three major U.S. stock indexes closed lower on Thursday as rising Treasury yields pressured investor sentiment, while weaker-than-expected results from retail giant Walmart raised concerns about consumer strength. Higher oil prices also added to inflation worries.
Walmart shares dropped 9.2% after the world’s largest traditional retailer missed Wall Street expectations for quarterly comparable sales growth. The results suggested that higher gasoline prices were causing consumers to reduce spending, weighing on both the consumer staples and consumer discretionary sectors.
Walmart Results Pressure Consumer Stocks
Walmart’s weaker performance affected other major retailers, with Costco, Dollar Tree and Albertsons also declining between 1% and 2.6%.
Mona Mahajan, head of investment strategy at Edward Jones, said investors were already concerned about consumer resilience following weaker-than-expected retail sales and labor market data in July. Rising crude oil prices above $87 per barrel added further pressure by increasing concerns about household spending power.
“There is some question about how resilient the consumer can be with ongoing elevated gas prices and inflationary pressures,” Mahajan said.
Treasury Yields Add Pressure to Equities
Rising bond yields were another major factor weighing on markets. Stocks had rallied on Wednesday after the U.S. Treasury announced plans to more than double the expected size of its bond buyback program to slow the recent increase in yields.
However, yields resumed their upward move on Thursday. The 30-year and 10-year Treasury yields briefly declined after Treasury Secretary Scott Bessent suggested the government could increase the volume of bond repurchases again, but the relief was short-lived.
Investors remain concerned about inflation risks from higher oil prices, increased government borrowing and large debt issuance from technology companies funding artificial intelligence infrastructure projects.
Major Indexes Close Lower
The Dow Jones Industrial Average fell 703.84 points, or 1.32%, to close at 52,759.21. The S&P 500 declined 66.82 points, or 0.87%, to 7,641.16, while the Nasdaq Composite dropped 263.92 points, or 1.00%, to 26,067.17.
The S&P 500 finished about 2% below its latest record close, while the Nasdaq remained more than 3% below its June 2 record finish.
Consumer staples was the weakest S&P 500 sector, falling 1.93%, followed by healthcare, which also declined 1.93%. Consumer discretionary stocks dropped 1.8%, with Amazon among the largest contributors to the sector’s decline.
Oil and Energy Stocks Gain
The S&P 500 energy sector rose 0.4% as oil prices advanced for a fifth consecutive session. The gains came as U.S.-Iran peace talks remained stalled and concerns grew over possible Middle East supply disruptions.
Real estate was the only other S&P 500 sector to finish higher, gaining 0.15%.
Companies sensitive to fuel costs, including Royal Caribbean Group and Carnival, declined more than 4% as higher oil prices raised concerns about operating expenses.
Crypto Stocks Rally While Moderna Falls
Cryptocurrency-related companies rallied after President Donald Trump urged Congress to pass new crypto legislation. Strategy and Coinbase Global both gained more than 7%.
Moderna shares fell 23.5% after surging nearly 177% the previous day following positive results from its personalized cancer vaccine trial with Merck.
Deere shares climbed 6.9% after the agricultural equipment manufacturer raised the lower end of its full-year net income forecast.
Corporate Movers
Coty shares declined 9.2% after the cosmetics company forecast weaker-than-expected current-quarter earnings and withheld its annual outlook.
Advance Auto Parts dropped 24.5% after issuing a weaker annual sales forecast.
Despite the broader market decline, some companies continued to benefit from positive catalysts, including energy firms, cryptocurrency companies and businesses tied to industrial demand.
