U.S. stocks moved lower on Thursday as an early rally in Treasury bonds quickly lost momentum. Investor sentiment also weakened as oil prices continued to rise amid renewed tensions between the United States and Iran.
At 11:52 ET, the S&P 500 fell 0.4% to 7,674.25, while the Nasdaq Composite dropped 0.9% to 26,093.43. The Dow Jones Industrial Average also declined 0.9% to 53,010.34.
Treasury Bond Rally Quickly Fades
Bond markets remained a major focus for Wall Street.
On Wednesday, the U.S. Treasury announced plans to increase purchases of long-dated government debt to at least $4 billion from $2 billion.
The announcement initially triggered a rally in Treasury bonds and pushed yields lower.
The 30-year Treasury yield dropped 9.1 basis points from levels close to a two-decade high. Meanwhile, the benchmark 10-year yield declined 5.3 basis points.
However, the relief proved temporary.
Investors returned to selling bonds on Thursday, pushing the 30-year yield up 5.4 basis points to 5.248%.
U.S. Debt Above $40 Trillion Adds Pressure
Fresh concerns about U.S. government finances also weighed on the bond market.
Total U.S. national debt has now surpassed $40 trillion, intensifying worries about the country’s long-term fiscal position.
Dan Coatsworth, head of markets at AJ Bell, noted that the national debt has doubled over the past decade. He also highlighted that annual interest costs have climbed to around $1 trillion.
The milestone is increasing investor focus on federal deficits and the sustainability of U.S. borrowing.
Treasury Intervention May Offer Only Short-Term Relief
The Treasury’s recent intervention successfully pushed long-term yields lower for a brief period.
However, investors remain concerned that heavy government borrowing could keep upward pressure on yields over the longer term.
Long-duration Treasury bonds have been under pressure since the Federal Reserve’s July interest rate decision.
Higher oil prices have increased inflation concerns, while massive corporate debt issuance has also added supply to the bond market.
Major technology companies continue to raise significant amounts of capital to finance artificial intelligence infrastructure.
Bessent Says Treasury Has More Tools Available
U.S. Treasury Secretary Scott Bessent said several factors affecting the bond market may not be fully reflected in current pricing.
He pointed to thinner August trading volumes and heavy corporate debt issuance as important influences on long-term yields.
Bessent also indicated that Treasury buybacks could eventually exceed the currently announced $4 billion level.
He added that officials have additional tools available and suggested that Washington could soon place greater emphasis on fiscal consolidation.
Fed Minutes Keep Rate Hike Risks Alive
Investors were also digesting minutes from the Federal Reserve’s July policy meeting.
The Fed kept interest rates unchanged at that meeting. However, three regional Fed presidents favored a 25-basis-point rate increase.
The minutes showed that many policymakers could support additional rate hikes if inflation remains elevated.
Most officials still backed the decision to keep rates unchanged in July.
Middle East Conflict Raises Inflation Concerns
Federal Reserve officials also highlighted growing uncertainty surrounding inflation.
Several policymakers warned that an extended conflict in the Middle East could disrupt supply chains and push prices higher.
Higher energy costs are particularly important because they can increase transportation, production and consumer expenses.
That creates additional uncertainty around the Fed’s interest rate outlook.
Oil Prices Rise on Trump Iran Warning
Brent crude futures climbed about 2.2% to $93.65 per barrel on Thursday.
Oil prices moved higher after President Donald Trump warned of severe economic consequences for countries that continue doing business with Iran.
Trump also threatened to introduce tougher sanctions against Tehran.
Further restrictions on Iranian energy exports could tighten global supply and keep oil prices elevated.
Walmart Stock Slides After Sales Miss
Walmart was another major source of pressure on the Dow.
Shares of the retail giant fell nearly 10% after the company reported its weakest U.S. comparable sales growth in six years.
The sales figure also came in below analyst expectations.
Because Walmart is closely watched as an indicator of U.S. consumer health, the disappointing result added to concerns about the strength of household spending.
Deere Shares Jump After Guidance Update
Not all major stocks declined.
Shares of Deere & Company rose more than 9% after the agricultural equipment manufacturer raised the lower end of its 2026 net income forecast.
The stronger guidance helped Deere outperform the broader market during Thursday’s session.
Wall Street Faces Pressure From Yields and Oil
U.S. stocks remain caught between several major risks.
Higher Treasury yields, concerns over the $40 trillion national debt, rising oil prices and uncertainty surrounding Federal Reserve policy are all weighing on investor confidence.
At the same time, disappointing earnings reactions from companies such as Walmart are adding company-specific pressure to major indexes.
Investors will now be watching whether Treasury yields stabilize and whether geopolitical tensions continue to push energy prices higher.
