The Dow Jones Industrial Average dropped 514 points on Thursday as Treasury yields kept climbing despite the government's debt buyback operation. A 9% slide in Walmart shares and rising oil prices tied to Iran tensions added to the pressure across major indices.
U.S. stocks fell as Treasury yields kept marching higher even after the Treasury Department's extraordinary debt buyback operation, raising concerns that higher borrowing costs will throw a wrench into the bull market. The Dow Jones Industrial Average shed 514 points, or 1%, weighed down heavily by a slide in Walmart shares.
The S&P 500 lost 0.5%. The Nasdaq Composite dropped 0.9%. The losses came a day after Wall Street snapped a three-session losing streak, when yields on longer-dated Treasurys had pulled back from multi-year highs following the government's plan to ease pressure from a recent bond market rout.
Treasury buyback fails to cool yields
The 10-year Treasury yield climbed back above the level it held just before the Treasury Department said Wednesday morning it would at least double repurchases of 10-, 20- and 30-year debt in the coming months. The 10-year yield gained more than 5 basis points to 4.706%, while the 30-year Treasury bond yield added more than 5 basis points to 5.251%, after spiking to its highest level in nearly 20 years earlier this week.
Treasury Secretary Scott Bessent told CNBC Thursday that the buyback operation could be larger than the $4 billion announced. Adam Phillips, managing director of investments at EP Wealth Advisors, is skeptical the program will provide lasting relief. According to CNBC: "This is not the cure to what ails the bond market." He added that relief from past interventions has generally been short-lived.
Walmart drags the Dow lower
A pullback in Walmart shares hit the broader market. The retail giant was pacing for its worst day in more than four years after its U.S. comparable sales missed analyst expectations, as did its adjusted earnings forecast for both the third quarter and full year. Walmart shares declined almost 9% in early afternoon trading Thursday.
If the stock closes at current levels, it will notch its worst day since May 17, 2022, when it fell more than 11%.
Oil rises as Iran tensions escalate
Also weighing on equities, oil prices rose again amid increasing tensions between Iran and the U.S. President Donald Trump said in a Truth Social post Wednesday that the U.S. would launch a large-scale economic operation against Iran. Bessent said in a Thursday interview with CNBC that the U.S. plans to impose the toughest sanctions in history against Iran.
West Texas Intermediate crude's contract for October delivery rose 2% to trade above $86 per barrel. Global benchmark Brent crude futures moved up 2% to above $93 a barrel.
Source: CNBC
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