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.
