Wednesday's relief rally did not last long. The Dow Jones Industrial Average plunged 703.84 points, or about 1.3%, on Thursday to close at 52,759.21, while the S&P 500 fell 0.9% to 7,641.16 and the Nasdaq Composite dropped roughly 1% to 26,067.17. A single earnings report from Walmart did much of the damage, but the broader story is that two separate reasons for comfort, a Treasury bond rescue and hopes for a calmer bond market, both faded within a day of appearing.
Walmart shares collapsed about 9.2% after the retailer reported US comparable sales growth of just 2.6%, its slowest pace in more than six years and well short of expectations. Higher fuel costs squeezed lower income shoppers and reduced discretionary spending, and the company's own commentary amounted to a fairly detailed warning about the health of the US consumer. Given Walmart's size and its role as a bellwether for household spending, a miss of that magnitude was always going to ripple beyond a single stock.
There were pockets of strength. Deere was among the few notable gainers on the day, helped by stronger quarterly results, a reminder that not every corner of the market is under the same pressure. Futures pointed to a steadier Friday, with S&P 500 and Nasdaq contracts up around 0.1%-0.3% and Dow futures closer to flat, suggesting Thursday's selloff was sharp but not yet spiraling.
The bond market told its own story. The US Treasury's move to double its long dated bond buybacks initially pushed yields lower earlier in the week. That calm proved short lived: by Thursday's close, the 10 year Treasury yield had climbed back toward 4.70% and the 30 year toward 5.25%, essentially erasing the buyback driven relief. Investors are increasingly skeptical that a program of this size can meaningfully offset roughly $40 trillion in outstanding federal debt and close to $1.2 trillion in annual interest costs, and Thursday's yield rebound was a fairly direct expression of that skepticism among bond traders who had briefly welcomed the announcement.
Asia had a mixed final session of the week. Japan's Nikkei slipped on Friday and ended the week down roughly 4.4%, while Hong Kong's Hang Seng gained roughly 0.5% and Shanghai traded close to flat. Japanese core inflation accelerating to 1.8% added to expectations that the Bank of Japan will follow through with a rate hike in September, a theme that is increasingly intertwined with global bond and currency markets given how much attention traders are paying to policy divergence between major central banks.
Commodities moved in the opposite direction from equities. Brent crude approached $94 a barrel and US crude traded near $86.78, putting both benchmarks on track for weekly gains above 7% as prolonged US-Iran tensions continued to disrupt Gulf supply. Expensive oil is a double edged sword for markets: it adds to inflation pressure at exactly the moment central bankers are trying to judge how much room they have to ease, while also acting as a direct tax on the same consumers Walmart just warned about.
Gold and bitcoin told a story of their own. Gold held near $4,530 an ounce, on track for a third consecutive weekly gain as fiscal anxiety and a softer dollar supported demand for a traditional safe haven. Bitcoin, by contrast, surged above $74,000, adding roughly 17% for the week even as equities slid, extending a pattern in which crypto has increasingly decoupled from traditional risk-off behavior. Washington's continued pro-crypto policy signals and a technical break above bitcoin's 200 day moving average both helped fuel the move, suggesting that risk-off no longer means the same thing for every asset class.
Looking ahead, traders now have two clear catalysts to watch. US flash PMI readings, covering both manufacturing and services activity, will help clarify whether the economy is cooling in an orderly way or losing momentum more abruptly, with implications for both the Federal Reserve's rate path and Treasury yields. Next week's Nvidia earnings will also carry outsized weight for the broader index, given how concentrated recent market gains have been in a small number of mega cap technology names whose results have repeatedly moved the entire tape.
The session also underscored how quickly sentiment can flip when a single data point undercuts a broader narrative. Earlier in the week, markets had rallied on hopes that the Treasury's bond buyback program signaled a durable easing in financial conditions. Thursday's price action suggested that optimism was premature: without a credible path to narrowing the federal deficit, buybacks alone are unlikely to keep yields anchored for long, and equity investors are increasingly pricing in the possibility that higher for longer yields could persist well into next year regardless of what the Federal Reserve does with its own policy rate.
Trading Insight
Thursday's selloff had two distinct drivers worth separating. The Walmart-led decline is a consumer spending story, and its read-through will become clearer as other retailers report in the coming weeks. The Treasury yield rebound is a fiscal credibility story, and it suggests that buyback driven relief in bond markets may be shallow and short lived unless it is paired with a credible plan to address the deficit. For index traders, that combination argues for watching Treasury yields alongside equities rather than treating them as separate markets right now: a fresh leg higher in the 10 year or 30 year yield would likely keep pressure on the Dow and S&P 500, while a genuine yield pullback could support a relief bounce. Next week's Nvidia earnings and the incoming flash PMI data are the two most likely near term catalysts to break the current stalemate in either direction. Until one of those catalysts arrives, expect choppy, headline driven trading rather than a clean, sustained trend in either the Dow or the broader S&P 500 over the next several sessions.