The S&P 500 Index ($SPX) (SPY) closed down by -0.87% on Thursday, the Dow Jones Industrial Average ($DOWI) (DIA) closed down by -1.32%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down by -0.72%. E-mini S&P futures (ESU26) fell -0.85%, and September E-mini Nasdaq futures (NQU26) fell -0.76%.
Stock indices settled lower on Thursday, with the S&P 500 and Nasdaq 100 falling to 2-week lows and the Dow Jones Industrial Average falling to a 2.5-week low. Stocks were under pressure on Thursday as rising oil prices boosted inflation risks and pushed bond yields higher. WTI crude oil climbed to a 1-month high on Thursday after President Trump threatened Iran with economic isolation, dimming prospects for both an imminent breakthrough in the war between Iran and the US and a normalization of crude flows through the Strait of Hormuz. The 10-year T-note yield rose +4 bp to 4.69%.
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Also, concerns about consumer spending weighed on stocks, as Walmart sank more than -9% after reporting weaker-than-expected Q2 comparable same-store sales and forecasting full-year adjusted EPS below the consensus.
Thursday’s US economic news was better than expected, supporting stocks. Weekly initial unemployment claims unexpectedly fell -6,000 to 206,000, showing a stronger labor market than expectations of an increase to 210,000. Also, the Aug Philadelphia Fed business outlook survey unexpectedly rose +6.0 to a 5.25-year high of 47.4, stronger than expectations of a decline to 24.8. In addition, July leading indicators rose +0.2% m/m, stronger than expectations of +0.1% m/m.
Fed comments on Thursday were mixed for stocks and bonds. On the hawkish side, St. Louis Fed President Alberto Musalem said he would have preferred to raise interest rates at the July FOMC meeting in order to bring down still-high inflation. Conversely, San Francisco Fed President Mary Daly said the US Treasury market is signaling that monetary policy is in a good place right now, and she’s “not seeing evidence” of a need for preemptive Fed rate hikes.
The lack of a clear path to a resolution in the Middle East is keeping the Strait of Hormuz closed and limiting crude supplies from the Middle East, keeping upward pressure on oil prices. Sep WTI crude oil prices (CLU26) rose more than +2% on Thursday to a 1-month high after President Trump threatened Iran and its trading partners with economic isolation. Mr. Trump said any country that allows its financial institutions, businesses, airports, or government entities to provide any type of lifeline to Iran will itself face tremendous consequences. However, Mr. Trump didn’t specify what measures he would take or which countries he would target.
Treasury Secretary Bessent said on Thursday that the administration will announce its plan to isolate Iran and its trading partners on Monday. The economic measures would add to the current US naval blockade of Iranian ports.
President Trump said he’s not interested in extending the expired agreement with Iran, dimming prospects for a swift reopening of the Strait of Hormuz. Mr. Trump also said that the US naval blockade on Iranian ports is putting pressure on the country, and he has no timeline for resolving the US-Iran conflict.
On Monday, US Energy Secretary Chris Wright said that the US is playing the long game with Iran, implying the US has no plans to de-escalate the conflict, potentially limiting crude supplied from the Middle East.
There have been no signs of progress toward a US-Iran agreement to fully open the Strait of Hormuz. An Iranian military spokesperson said last Thursday that no ship can safely pass the Strait of Hormuz without Iran’s authorization and supervision and that President Trump’s claims of control over the Strait are “nothing more than lies.” The Iranian statement was in response to President Trump’s comment last Tuesday that the US has “total control over the Hormuz Strait” and that “we own it.”
The outlook for strong Q2 earnings is a bullish factor for stocks. The S&P 500 is tracking for earnings growth of almost 32% in Q2, well above projections of +23%, and nearly four times the average earnings growth rate outside of the Covid period since Q4 of 2013, according to Bloomberg Intelligence. AI spending is expected to account for most of earnings, with AI infrastructure stocks set to contribute nearly 60% of the S&P 500’s earnings-per-share growth in Q2. So far, earnings results have been positive, with 86% of the 465 S&P 500 companies that have reported Q2 earnings beating estimates, according to Bloomberg data.
The markets are discounting a 35% chance of a +25 bp rate hike at the next FOMC meeting on September 15-16.
Overseas stock markets settled mixed on Thursday. The Euro Stoxx 50 slid to a 2.5-week low and closed down -0.35%. China’s Shanghai Composite closed up +0.24%. Japan’s Nikkei-225 Stock Average closed up +1.36%.
Interest Rates
September 10-year T-notes (ZNU6) closed down by -9 ticks on Thursday. The 10-year T-note yield rose +4.5 bp to 4.682%. Sep T-notes were under pressure on Thursday from rising crude oil prices that boosted inflation expectations. WTI crude climbed more than +2% on Thursday to a 1-month high, lifting the 10-year breakeven inflation rate to a 2.25-month high of 2.355%. Thursday’s better-than-expected US economic news on weekly jobless claims, the Aug Philadelphia Fed business outlook survey, and July leading indicators is hawkish for Fed policy and also weighed on T-note prices.
Losses in T-notes were limited on Thursday after San Francisco Fed President Mary Daly said she’s “not seeing evidence” of a need for preemptive Fed rate hikes.
European government bond yields finished mixed on Thursday. The 10-year German bund yield fell from a 15-year high of 3.276% and finished down -0.2 bp to 3.259%. The 10-year UK gilt yield rose +2.3 bp to 5.067%.
German July PPI rose +1.1% m/m and +3.0% y/y, stronger than expectations of +0.6% m/m and +2.5% y/y, with the +3.0% y/y gain the largest year-on-year increase in 3.25-years.
Markets are discounting a 95% chance of a +25 bp ECB rate hike at its next policy meeting on September 10.
US Stock Movers
Cybersecurity stocks retreated on Thursday after Axios reported that CrowdStrike CTO Zaitsev is leaving the company to launch an AI-cyber fund. CrowdStrike Holdings (CRWD), closed down more than -5%, and Okta (OKTA), Zscaler (ZS), and Cloudflare (NET) closed down more than -4%. Also, Palo Alto Networks (PANW) closed down more than -2%, and Fortinet (FTNT) closed own more than -1%.
Airline stocks and cruise line operators fell on Thursday as WTI crude oil rose more than +2% to a 1-month high. Carnival (CCL) closed down more than -5%, and Royal Caribbean Cruises (RCL) closed down more than -4%. Also, United Airlines Holdings (UAL), Southwest Airlines (LUV), and Norwegian Cruise Line Holdings (NCLH) closed down more than -3%. In addition, American Airlines Group (AAL), Alaska Air Group (ALK), and Delta Air Lines (DAL) closed down more than -2%.
Cryptocurrency-exposed stocks extended Wednesday’s sharp gains on Thursday, as Bitcoin (^BTCUSD) rose more than +5% to a 2.5-month high. MARA Holdings (MARA) closed up more than +15%, and Riot Platforms (RIOT) closed up more than +8%. Also, Strategy (MSTR) closed up more than +7% to lead gainers in the Nasdaq 100, and Coinbase Global (COIN) and Galaxy Digital Holdings (GLXY) closed up more than +7%. In addition, Circle Internet Group (CRCL) closed up more than +6%.
Energy producers and service providers moved higher on Thursday as WTI crude oil rose more than +2% to a 1-month high. ConocoPhillips (COP) closed up more than +3%, and APA Corp (APA), Devon Energy (DVN), and Occidental Petroleum (OXY) closed up more than +2%. Also, Diamondback Energy (FANG) and Halliburton (HAL) closed up more than +1%, and ExxonMobil Holdings (XOM) closed up +0.93%.
Advance Auto Parts (AAP) closed down more than -24% after reporting Q2 comparable sales unexpectedly fell -0.5% y/y, weaker than expectations of a +1.31% y/y increase.
Moderna (MRNA) closed down more than -23% to lead losers in the S&P 500 as it gives back some of Wednesday’s +175% surge.
Walmart (WMT) closed down more than -9% to lead losers in the Dow Jones Industrials and Nasdaq 100 after reporting Q2 US-only store sales rose +2.60%, weaker than the consensus of +3.67%, and forecast 2027 adjusted EPS of $2.80 to $2.87, below the consensus of $2.90.
Wolfspeed (WOLF) closed down more than -9% after reporting Q4 GAAP gross margin down -25% y/y and that it expects Q1 adjusted gross margin to remain negative.
Nordson (NDSN) closed up +8% to lead gainers in the S&P 500 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.
Deere & Co (DE) closed up more than +6% after reporting Q3 net income of $1.38 billion, better than the consensus of $1.27 billion, and raising its full-year net income estimate to $4.75 billion to $5.00 billion from a previous estimate of $4.50 billion to $5.00 billion.
Ethan Allen Interiors (ETD) closed up more than +1% after declaring a $3-per-share special dividend and reaffirming its debt-free financial position.
Earnings Reports (8/21/2026)
BJ’s Wholesale Club Holdings Inc (BJ), BRT Apartments Corp (BRT), Buckle Inc/The (BKE), Ubiquiti Inc (UI).
On the date of publication,
Rich Asplund
did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes.
For more information please view the Barchart Disclosure Policy
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