Wall Street clawed back much of a bruising midweek selloff on Friday, with the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite all closing higher after Treasury Secretary Scott Bessent moved to ramp up government bond buybacks and ease the pressure on yields that had been climbing for weeks. U.S. markets are closed until Monday, so Friday's close remains the most recent trading data as this edition goes to press.
The S&P 500 rose 33.21 points, or 0.43%, to 7,674.37. The Dow added 517.80 points, or 0.98%, to 53,277.01. The Nasdaq Composite gained 113.29 points, or 0.43%, to 26,180.46, and the small-cap Russell 2000 climbed 0.85% to 3,017.87. The gains recovered a large share of Thursday's rout, when the Dow shed 703.84 points, or 1.3%, and the Nasdaq fell 1%, as investors absorbed a rare stumble from Walmart and a fresh jump in crude prices tied to the widening standoff with Iran.
Walmart's shares slid roughly 9% to 10% on Thursday even though the retailer beat estimates on both the top and bottom lines for its fiscal second quarter, with revenue of $187.9 billion, up 5.9% from a year earlier, and adjusted earnings per share of $0.81, up 19.1%. What spooked investors was comparable sales: U.S. comps rose just 2.6%, badly missing the roughly 3.8% Wall Street had modeled and marking Walmart's first comps miss in more than five years. The company also guided full-year adjusted earnings to $2.80 to $2.87 a share, below the roughly $2.90 analysts had expected.
When fuel prices increase and get above $4, perhaps there's a psychological impact to that … consumers are making trade-offs.
John David Rainey, Walmart chief financial officer
Because Walmart is often read as a proxy for the broader U.S. household budget, the miss reverberated well beyond the stock itself, feeding a Thursday selloff that also caught rising Treasury yields and surging oil prices in its wake.
Treasury steps in to calm the bond market
Friday's rebound traced largely to Washington. Bessent said this week the Treasury would at least double the size of its long-dated debt buyback operations, to a minimum of $4 billion per operation from $2 billion previously, targeting the 10-to-20-year and 20-to-30-year portions of the curve that traders say have faced a buyers' strike since late June. He told reporters Thursday the ceiling could rise further still. The 10-year Treasury yield eased to 4.647% and the 30-year "long bond" slid to 5.196% in the wake of the initial announcement, taking some pressure off the equity valuations that had been squeezed by the summer's climb in borrowing costs.
Markets are ending the week on a softer tone after the relative calm of early August was disrupted by renewed pressure in global bond markets.
Daniela Hathorn, senior market analyst at Capital.com
Oil added its own volatility to the week. Brent crude settled Friday just under $94 a barrel — its highest close in weeks and on pace for a second straight weekly gain of roughly 6% — after Bessent vowed the "toughest sanctions in history" against Iran on top of the U.S. naval blockade already in place. Higher crude flows through to diesel, jet fuel and the broader cost structure many S&P 500 companies depend on, another reason Thursday's spike rattled equity desks even before Walmart reported.
What investors are watching next
Traders now have a full weekend to digest a week that scrambled the market's usual script: a retailer beat on earnings but got punished on guidance, a geopolitical flashpoint pushed energy costs higher, and it was the Treasury Department, not the Federal Reserve, that stepped in to calm rates markets. Bessent has said he will detail new Iran sanctions measures at a press conference Monday, a potential catalyst for the oil market and, by extension, for equities. Federal Reserve officials are also due at the Kansas City Fed's Jackson Hole symposium starting August 27, where investors will parse any signal on the path of interest rates heading into the fall.
For now, strategists say the Walmart miss bears watching as other large retailers report in the coming weeks, to see whether the pullback in comparable sales was company-specific or an early sign that higher gasoline prices and elevated borrowing costs are starting to bite household budgets more broadly.
