The S&P 500 (SPY) dipped 0.29%, the Dow Jones Industrial Average (DIA) fell 0.64%, and the Nasdaq 100 (QQQ) declined 0.51% today. E-mini S&P futures (ESU26) slipped 0.20%, and September E-mini Nasdaq futures (NQU26) dropped 0.30%.
Stock indices came under pressure, with the S&P 500 and Nasdaq 100 slipping to two-week lows and the Dow Jones Industrial Average declining to a 2.5-week low. Rising oil prices are fueling inflation concerns and pushing bond yields higher. WTI crude oil rose to a one-month high following President Trump’s threat of economic isolation against Iran, dimming prospects for an imminent breakthrough in the U.S.-Iran conflict and normalization of crude flows through the Strait of Hormuz. The 10-year Treasury yield edged up 4 basis points to 4.69%.
Walmart shares fell more than 9% after the retailer reported weaker-than-expected Q2 comparable same-store sales and guided full-year adjusted EPS below consensus.
U.S. economic data came in better than expected, providing some support for stocks. Weekly initial unemployment claims fell unexpectedly by 6,000 to 206,000, indicating a stronger labor market than the forecasted rise to 210,000. The August Philadelphia Fed business outlook survey surged 6.0 points to 47.4, reaching a 5.25-year high versus expectations of a decline to 24.8. July leading indicators also rose 0.2% month-over-month, beating expectations of a 0.1% increase.
San Francisco Fed President Mary Daly offered dovish support to stocks and bonds, stating the U.S. Treasury market suggests monetary policy is in a favorable position and she has ‘not seen evidence’ of a need for preemptive Fed rate hikes.
With no clear path to a Middle East resolution, the Strait of Hormuz remains closed, limiting crude supplies and keeping upward pressure on oil prices. Sep WTI crude oil prices (CLU26) rose more than 1% to a one-month high after President Trump threatened Iran and its trading partners with economic isolation. He warned that any country providing financial, business, airport, or government support to Iran would face severe consequences, though he did not specify targeted measures or nations.
President Trump indicated he has no intention of extending the expired Iran nuclear agreement, dimming hopes for a swift reopening of the Strait of Hormuz. He also noted that the U.S. naval blockade on Iranian ports is applying pressure on the country, though he provided no timeline for resolving the U.S.-Iran conflict.
U.S. Energy Secretary Chris Wright stated that the U.S. is playing the long game with Iran, suggesting no plans to de-escalate the conflict, which could further limit Middle Eastern crude supplies.
Treasury Secretary Scott Bessent said last week that the administration will soon unveil unprecedented economic measures against Iran, described as ‘without precedent in the history of economic isolation of a country.’ These would supplement the existing U.S. naval blockade of Iranian ports.
Progress toward a U.S.-Iran agreement to fully reopen the Strait of Hormuz remains absent. An Iranian military spokesperson said last Thursday that no vessel can safely transit the Strait without Iran’s authorization and supervision, calling President Trump’s claims of control ‘nothing more than lies.’ The remarks came in response to Trump’s earlier statement that the U.S. has ‘total control over the Hormuz Strait’ and that ‘we own it.’
Q2 earnings outlook remains bullish for equities. The S&P 500 is projected to post nearly 32% earnings growth in Q2, well above the +23% consensus and nearly four times the average growth rate outside the Covid era since Q4 2013, per Bloomberg Intelligence. AI spending is expected to drive most of the growth, with AI infrastructure stocks contributing almost 60% of the S&P 500’s per-share earnings increase. To date, 86% of the 465 S&P 500 companies that have reported Q2 results have beaten estimates, according to Bloomberg data.
Markets are pricing in a 33% probability of a 25 basis point rate hike at the upcoming FOMC meeting on September 15-16.
Overseas markets closed mixed today. The Euro Stoxx 50 fell to a 2.5-week low, down 0.38%, while China’s Shanghai Composite rose 0.24% and Japan’s Nikkei 225 advanced 1.36%.
Interest Rates
September 10-year T-notes (ZNU6) fell 8 ticks, pushing the 10-year Treasury yield up 4.2 basis points to 4.688%. T-notes face pressure from rising crude oil prices, which are boosting inflation expectations. WTI crude climbed more than 2% to a one-month high, lifting the 10-year breakeven inflation rate to a two-month high of 2.322%. Today’s better-than-expected U.S. economic data on jobless claims, the Philadelphia Fed outlook, and leading indicators is seen as hawkish for Fed policy, also weighing on T-note prices.
Losses in T-notes were tempered after San Francisco Fed President Mary Daly said she has ‘not seen evidence’ of a need for preemptive Fed rate hikes.
European government bond yields were mixed. The 10-year German bund yield fell from a 15-year high of 3.276% to 3.250%, down 1.2 basis points, while the 10-year U.K. gilt yield rose 0.7 basis points to 5.051%.
German July PPI rose 1.1% month-over-month and 3.0% year-over-year, exceeding expectations of 0.6% m/m and 2.5% y/y. The 3.0% yearly gain marked the largest increase in 3.25 years.
Markets are pricing in a 95% probability of a 25 basis point ECB rate hike at its next policy meeting on September 10.
US Stock Movers
Cybersecurity stocks declined after reports that CrowdStrike CTO Zaitsev is leaving to launch an AI-cyber fund. CrowdStrike Holdings (CRWD), Okta (OKTA), and Zscaler (ZS) fell more than 2%, and Cloudflare (NET) declined more than 1%. Also, Palo Alto Networks (PANW) slipped 0.25%.
Airline and cruise stocks fell with WTI crude up more than 1% at a one-month high. Norwegian Cruise Line Holdings (NCLH) dropped more than 4%, and Carnival (CCL) fell more than 3%. United Airlines Holdings (UAL), American Airlines Group (AAL), Alaska Air Group (ALK), and Royal Caribbean Cruises (RCL) fell more than 2%. Delta Air Lines (DAL) and Southwest Airlines (LUV) declined more than 1%.
Cryptocurrency-exposed stocks extended Wednesday’s gains. Bitcoin (^BTCUSD) rose more than 3% to a 2.5-month high. MARA Holdings (MARA) gained more than 8%, and Coinbase Global (COIN) rose more than 6%. Galaxy Digital Holdings (GLXY) advanced more than 5%, and Riot Platforms (RIOT) and Circle Internet Group (CRCL) gained more than 4%. Strategy (MSTR) rose more than 4% to lead Nasdaq 100 gainers.
Energy producers and service providers moved higher, with WTI crude oil up more than 2% at a one-month high. ConocoPhillips (COP) gained more than 3%, and APA Corp (APA), Diamondback Energy (FANG), Occidental Petroleum (OXY), Devon Energy (DVN), Halliburton (HAL), and ExxonMobil Holdings (XOM) rose more than 2%. Chevron (CVX), Marathon Petroleum (MPC), Phillips 66 (PSX), and SLB Ltd (SLB) gained more than 1%.
Advance Auto Parts (AAP) fell more than 22% after Q2 comparable sales unexpectedly declined 0.5% year-over-year, weaker than expectations of a +1.31% increase.
Moderna (MRNA) fell more than 19% today, giving back some of Wednesday’s +175% surge.
Wolfspeed (WOLF) fell more than 12% after reporting Q4 GAAP gross margin down 25% year-over-year and expecting Q1 adjusted gross margin to remain negative.
Walmart (WMT) fell more than 9% to lead losers in the Dow Jones Industrials and Nasdaq 100 after reporting Q2 U.S.-only store sales rose 2.60%, weaker than the consensus of 3.67%, and guiding 2027 adjusted EPS of $2.80 to $2.87, below the consensus of $2.90.
Deere & Co (DE) rose more than 7% to lead S&P 500 gainers after reporting Q3 net income of $1.38 billion, beating the consensus of $1.27 billion, and raising its full-year net income estimate to $4.75 billion to $5.00 billion from $4.50 billion to $5.00 billion.
Nordson (NDSN) rose more than 6% after reporting Q3 sales of $817.7 million, stronger than the consensus of $779.6 million, and raising its full-year adjusted EPS forecast to $11.80 to $12.00 from $11.30 to $11.80, above the consensus of $11.60.
Etsy (ETSY) rose more than 1% after Bank of America Global Research upgraded the stock to buy from neutral with a price target of $105.
Ethan Allen Interiors (ETD) rose more than 1% after declaring a $3-per-share special dividend and reaffirming its debt-free financial position.
Earnings Reports (8/20/2026)
Deere & Co (DE), Ross Stores Inc (ROST), Walmart Inc (WMT).
