By Sinéad Carew and Avinash P
Aug 20 (Reuters) – The main U.S. stock indexes fell on Thursday and hovered near two-week lows, as rising Treasury yields dented risk appetite and disappointing results from retail bellwether Walmart added pressure along with rallying oil prices.
Walmart shares fell 9% after it missed Wall Street expectations for quarterly comparable sales rising gasoline prices had shoppers reining in spending. The report dragged the S&P 500 consumer staples index down 1.5%. Consumer discretionary fell 1.9%, putting it among the weakest sectors.
Rival retailers also fell after Walmart’s earnings, with Albertsons down 1.5% and Costco down 2.3%.
Another negative, said Mona Mahajan, head of investment strategy at Edward Jones, was U.S. crude oil trading above $87, touching its highest level since late July. She also pointed to upward pressure on bond yields as a further weight on stocks.
Wall Street indexes had risen on Wednesday after the U.S. Treasury Department said it would spend more than double the expected amount on buying back bonds in a bid to slow gains in bond yields. On Thursday, however, stocks declined as yields resumed their advance.
U.S. Treasury Secretary Scott Bessent said he may again increase the volume of Treasury bonds the government will repurchase. Yields on the 30-year and 10-year bonds pared gains briefly after his comments, before resuming their upward path.
“There are a couple of headwinds that the markets woke up to today,” said Mahajan. “One was a resumption in the increase in bond yields across the curve that came despite yesterday’s Treasury move … it reversed very quickly, within 24 hours.”
And after weaker-than-expected retail sales data for July and mixed labor market reports, investors were already monitoring consumer health, when the Walmart numbers came in weaker than expected.
“There is some question about how resilient the consumer can be with ongoing elevated gas prices and inflationary pressures,” Mahajan said.
At 2:12 p.m. the Dow Jones Industrial Average fell 605.14 points, or 1.13%, to 52,857.91, the S&P 500 lost 54.02 points, or 0.70%, to 7,653.96 and the Nasdaq Composite lost 289.62 points, or 1.10%, to 26,040.53.
The S&P 500 consumer discretionary sector was the biggest drag on the benchmark index, dragged by losses in Amazon and Tesla.
The S&P 500 energy index rose 0.6% as oil gained for the fifth consecutive session due to stalled U.S.-Iran peace talks and Middle East supply disruptions.
Separately, data showed the number of Americans filing claims for unemployment benefits slipped last week, suggesting the labor market remained stable.