Stocks struggled for direction Thursday as investors digested some good-news-is-bad-news economic data and the latest batch of earnings reports.
The bulk of the day's price action was to the downside, though, with tech stocks seeing outsized losses as Treasury yields spiked to levels not seen since the Great Financial Crisis.
On the economic front, the Philadelphia Fed manufacturing index swung to a positive reading of 12.0 in August from last month's reading of -13.5. This was the first time since May 2022 that all of the survey's indicators – general activity, new orders and shipments – were positive.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Additionally, the Labor Department said initial jobless claims fell by a more-than-expected 11,000 last week to 239,000. "This morning's unemployment claims data continues to point to a tight labor market while yesterday's release of minutes from the Federal Reserve's July meeting revealed that policymakers still believe considerable inflation risks exist," says José Torres, senior economist at Interactive Brokers. As such, the possibility remains that the Fed will hike rates again at its November meeting, Torres adds.
Futures traders are currently pricing in a 37% probability of a quarter-point rate hike at the November meeting, up from 27.8% one week ago, according to CME Group.
Walmart stock drops despite earnings beat
In single-stock news, Walmart (WMT, -2.2%) was the latest major retailer to report earnings. In the second quarter, the blue chip retailer reported better-than-expected earnings of $1.84 per share on revenue of $161.6 billion. Additionally, U.S. same-store sales were up 6.4%, well above the 4.1% analysts were expecting, while inventory levels fell 8% from the year prior. The company also raised its full-year guidance.
"Walmart performed better than Target (TGT) due to online spending and mostly because it sells more everyday staples," says Anthony Denier, CEO of investing platform Webull. "Still, rising energy prices, student loan payments starting up again, inflation, more rate hikes and tighter lending standards present headwinds for the retail sector."
Elsewhere, CVS Health (CVS) plummeted 8.1% after Blue Shield of California said it will no longer use the drugstore chain and healthcare services company as its preferred pharmacy benefits partner. While CVS will still provide specialty drugs to Blue Shield of California, the nonprofit health insurer will use Mark Cuban's Cost Plus Drug Company and Amazon Pharmacy as its main pharmacy network.
U.S. Steel rises on reports of another potential bidder
Another notable mover today was U.S. Steel (X), which added 0.2% after Reuters reported ArcelorMittal (MT, +0.7%) is considering a potential buyout offer for the Pittsburgh-based steel company.
ArcelorMittal would join Cleveland-Cliffs (CLF, -2.5%) and privately owned Esmark as potential suitors for the company. The two firms have recently put in offers of $7.3 billion and $7.8 billion, respectively, for U.S. Steel. As a result, shares of X have shot up almost 40% in the past week.
As for the major indexes, the Dow Jones Industrial Average closed down 0.8% at 34,474, while the S&P 500 slipped 0.8% to 4,370. Meanwhile, the Nasdaq Composite dropped 1.2% to 13,316 as rate-sensitive tech and communication services stocks like Apple (AAPL, -1.5%) and Netflix (NFLX, -3.0%) fell amid spiking Treasury yields. Most notably, the 10-year Treasury yield jumped 2.6 basis points to 4.284% – its highest level since early 2008. (A basis point = 0.01%)
Related Content
-
Stock Market Today: Stocks Gain on Tech, Auto Tariff TalkThe Trump administration said late Friday that it will temporarily halt tariffs on some Chinese tech imports.
-
Sam's Club Plans Aggressive Expansion: Discover Its New LocationsSam's Club expansion plans will open up to 15 new stores each year. Learn where they plan to open in 2025.
-
Wall Street Is Worried About Apple Stock. Should You Be Too?Analysts expect Trump's sweeping tariffs to have an outsized impact on Apple stock. How concerned should investors be?
-
The Stock Market Is Selling Off. Here's What Investors Should DoInvestors started fleeing the equities market en masse in response to the Trump administration's "jaw-dropping" tariffs. But the experts say don't panic.
-
Walmart's Transformative Ways Spark a 100,000% Stock ReturnWalmart's strategic store expansion and relentless cost-cutting have catapulted its share price over the years.
-
Should You Sell Tesla Stock as Elon Unrest Grows?Tesla's CEO is wearing many hats and is managing them "with great difficulty."
-
5 of Warren Buffett's Best InvestmentsWarren Buffett has had plenty of wins throughout his decades of investing. Here, we highlight five of Buffett's best investments.
-
Apple's 100,000% Return Is a Result of Innovation, Brand Loyalty and BuybacksApple spends billions buying back its own shares, but this is just one catalyst behind the incredible growth in its share price.
-
Stock Market Today: Dow Drops 670 Points on Trade War EffectA prodigious rally by the battered leader of the AI revolution typified an increasingly volatile picture for investors, traders and speculators.
-
Stock Market Today: Markets Count Down to Tariff DayInvestors, traders and speculators stand by for updates from Washington, D.C., on new terms of global trade.
