US Stocks Decline Amid Rising Treasury Yields
U.S. stock markets faced a downturn on Thursday, following an increase in Treasury yields that negated the slight drop from the previous day. This shift occurred after the Treasury Department declared it would ramp up government bond purchases.
The Dow Jones Industrial Average fell by 411 points, or 0.8%. Meanwhile, the S&P 500 saw a decline of 0.3%, and the Nasdaq Composite dropped by 0.7%.
Bond yields increased as well, recovering from a dip on Wednesday. The Treasury Department announced plans to at least double its buybacks of 10-, 20-, and 30-year bonds in the upcoming months. Treasury Secretary Scott Bessent mentioned during a CNBC interview that the scope of the bond buyback operation might exceed the initially stated $4 billion.
The yield on the 30-year Treasury bond rose more than 5 basis points, reaching 5.251%, while the yield on 10-year Treasury notes also climbed over 5 basis points to 4.706%. Earlier this week, the 30-year Treasury yield hit its highest level in nearly two decades.
However, Adam Phillips, managing director at EP Wealth Advisors, expressed doubts about whether share buyback initiatives would adequately address the issues in the bond markets. He noted, “This is not a cure for what’s ailing the bond markets. There are structural forces at play here that are really beyond the control of Treasury and the administration.” He emphasized that the successful bailouts seen in previous interventions were often temporary, suggesting a need for more sustainable solutions.
In related news, oil prices continued to climb amid escalating tensions between the U.S. and Iran. President Trump mentioned in a recent post on Truth Social that the U.S. would implement “the most devastating economic operation ever waged against any country.” He described this as an “economic war and isolation of unprecedented proportions.”
Bessent also confirmed during his CNBC interview that the U.S. plans to impose “the toughest sanctions in history” against Iran. As a result, West Texas Intermediate Crude Oil Futures increased by 2%, trading above $88 per barrel, while Brent crude oil futures also rose by 2% to over $93 per barrel.
In the retail sector, Walmart’s stock prices fell by 9% after its U.S. comparable sales did not meet analyst expectations, alongside downgraded profit forecasts for both the third quarter and full year.
Previously, Wall Street had experienced a positive session, with the S&P 500 breaking a three-day losing streak as long-term U.S. Treasury yields decreased from recent highs following the government’s announcement to alleviate pressure from the bond market selloff.
