The bond market swings back to worries and knocks US stocks lower
[August 21, 2026] By
STAN CHOE
NEW YORK (AP) — The relief that swept the bond market just a day earlier
disappeared on Thursday as oil prices, worries about high inflation and
the U.S. government’s debt kept rising. That helped knock the U.S. stock
market to its worst day in three weeks, and Walmart led the way on
concerns about its upcoming profits.
The S&P 500 fell 0.9% for its fourth loss in the five days since setting
its all-time high last week. The Dow Jones Industrial Average dropped
703 points, or 1.3%, and the Nasdaq composite sank 1%.
The bond market remains the center of the action after yields charged
higher through the summer. Treasury Secretary Scott Bessent made a
surprise move Wednesday that brought some temporary relief. His
department said it will at least double the size of its planned
purchases of longer-term Treasurys from Sept. 9 through Nov. 4.
That helped push yields down after the 10-year Treasury’s yield hit its
highest level in more than a year and the 30-year yield got back to
where it was in 2007. It was a big deal because high yields slow the
economy by raising interest payments for people, companies and the
government, and they can undercut prices for stocks and other
investments.
But analysts had cautioned the effect may be short lived, given how
small the purchases are relative to the overall size of the Treasury
market and how they don’t fix the fundamental concerns that had driven
up yields. Plus, more signals arrived quickly to keep those concerns
high.
The U.S. government’s debt topped $40 trillion on Wednesday, a
staggering record that arrived just months after the national debt first
blew past the $39 trillion mark in April, because Washington continues
to spend far more money than it brings in.
And on Thursday, the price for a barrel of Brent crude climbed 2.4% to
$93.78 as uncertainty continues about when the war with Iran will allow
oil tankers to freely exit the Persian Gulf again. President Donald
Trump threatened Iran with “the MOST CRUSHING ECONOMIC OPERATION EVER
TAKEN AGAINST ANY COUNTRY” late Wednesday but provided few details.
That helped push the 10-year Treasury yield up to 4.70% from 4.65% late
Wednesday. It’s almost back to its 4.71% level from late Tuesday, before
the Treasury Department made its announcement.
A couple encouraging reports on the U.S. economy also helped raise
longer-term Treasury yields, which move with investors’ expectations for
the economy and inflation in coming years. One said fewer U.S. workers
applied for unemployment benefits last week than economists expected,
while another said manufacturing in the mid-Atlantic region appears to
be much stronger than expected.
On Wall Street, Walmart was the heaviest weight on the S&P 500 and fell
9.2% for its worst loss in four years even though it reported stronger
profit and revenue for the latest quarter than analysts expected.
Investors focused instead on an important underlying measure of revenue
growth, which slowed again. Its forecast for profit in the current
quarter also fell short of analysts’ expectations.
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Options trader Anthony Spina works on the floor of the New York
Stock Exchange, Monday, Aug. 17, 2026, in New York. (AP Photo/Yuki
Iwamura)
 Given its massive size, Walmart
offers a look at how shoppers are doing across the United States. A
surprisingly weak update on sales at U.S. retailers overall last
month had raised worries that shoppers may be succumbing to pressure
from high inflation and a job market that may be looking less solid.
Advance Auto Parts tumbled 24.5% for its worst loss in three years
after the retailer reported weaker revenue for the latest quarter
than analysts expected, even though its profit topped expectations.
CEO Shane O’Kelly said that “tighter household budgets constrained
spending more than we anticipated, especially during the last four
weeks of the quarter.”
Spending by U.S. consumers is the main engine of the economy, and a
pullback by them could exacerbate what’s already a slowdown in
growth for the economy.
A pullback could also mean a double-whammy for travel companies,
which would see fewer bookings when they have to pay higher prices
for fuel. Norwegian Cruise Line Holdings fell 3.4%, while United
Airlines sank 3.5% and American Airlines lost 2.5%.
Helping to keep Wall Street’s losses in check was Deere, which
reported stronger profit and revenue for the latest quarter than
analysts expected. It rose 6.9% as the company said order trends
indicate the agriculture equipment business looks set to accelerate
after this year.
All told, the S&P 500 fell 66.82 points to 7,641.16. The Dow Jones
Industrial Average dropped 703.84 to 52,759.21, and the Nasdaq
composite sank 263.92 to 26,067.17.
In stock markets abroad, indexes were mixed in Europe following a
stronger finish in Asia.
South Korea’s Kospi soared 5.9% for one of the world’s biggest moves
after the two tech titans that dominate its market, Samsung
Electronics and SK Hynix, jumped. Such swings have become more
common for Seoul’s market, which has borne the brunt of rising and
falling worries that winning stocks in the artificial-intelligence
boom may have shot too high.
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AP Business Writers Chan Ho-him and Michelle Chapman contributed to
this report.
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