S&P500 Forecast: Long Yields Return as Walmart Hits the Dow

Treasury Relief Lasted One Session and the Market Is Splitting Three Ways

The bond market took back Wednesday’s buyback trade. Treasury yields moved higher Thursday and the rally in rate-sensitive stocks reversed with them. The Dow lost about 350 points, led lower by Walmart after investors saw through the headline beat and focused on softer U.S. comparable sales and weaker guidance. The S&P 500 and Nasdaq also turned lower as long yields returned to the levels that were causing damage before Treasury stepped in.

Crypto ignored all of it. Bitcoin pushed above $71,000 after Trump met with crypto executives at the White House and pushed Congress to pass the Clarity Act. The stock market has three separate arguments running at the same time and they are not moving in the same direction.

The Dow Jones Industrial Average fell about 350 points. The S&P 500 and Nasdaq Composite were also lower.

Daily S&P 500 Index (SPX) Technical Analysis

The S&P 500 Index is lower shortly after the opening on Thursday. The main trend is up, but the minor trend is down. This is producing the downside momentum.

Selling pressure could intensify throughout the session if the benchmark index continues to pull away from yesterday’s swing top at 7743.93. The daily chart shows there is plenty of room to the downside with the former record high at 7620.90 the first target. If a technical bounce fails at this level, pressure could increase with the intermediate 50% level at 7565.31 the next target, followed by the 50-day moving average at 7532.82.

Daily Dow Jones Industrial Average (DJI) Technical Analysis

The Dow is falling after reversing yesterday’s gains. Wednesday’s high at 53710.06 is now a new minor top. Today’s selling pressure has driven the Dow into a short-term retracement zone at 53143.20 to 52765.33. If buyers don’t materialize in this area, the selling could continue into the 50-day moving average at 52524.40.

As long as 53710.06 remains resistance, the bias will remain to the downside. There is the possibility of a steep loss if the 50-day MA fails as support.

Daily Nasdaq Composite Index (IXIC) Technical Analysis

The Nasdaq Composite is under pressure early Thursday after taking out yesterday’s low. A new lower swing top has formed at 26456.78 and the minor trend is down. This is helping to add to the market’s weak performance.

The price action and the lack of buyers suggest traders may be looking for value. The first value target is the 50-day moving average at 25932.19. There could be a technical bounce on the first test of this indicator. However, a failure to hold it could trigger a further decline into the short-term retracement zone at 25650.43 to 25361.31.

The Bond Market Took Back What Treasury Gave

Treasury announced Wednesday it would double the size of buyback operations for longer-dated debt. The 30-year yield dropped hard. Stocks, gold and crypto all caught a bid. Thursday the yields came back. The 10-year climbed above 4.69%. The 30-year moved back above 5.23%.

The government debt total has passed $40 trillion. Corporate borrowing is running at record levels as companies finance AI infrastructure. Defense spending is rising. Those forces are competing for the same pool of buyers that Treasury is trying to support with a buyback operation that does not start until September 9.

The Philadelphia Fed manufacturing index made the rate picture harder for stocks. Factory activity reached its highest level since April 2021. The employment measure also improved sharply. Crude oil near $88 WTI and above $94 Brent is keeping fuel costs elevated and feeding into the next round of inflation data. Strong economic numbers and firm oil give the Fed less reason to ease. The FOMC minutes already showed officials are still prepared to raise rates. Thursday’s data did not soften that message.

Walmart Showed the Consumer Is Still Spending but Starting to Feel It

Walmart dropped more than 8% despite a solid quarter, a raised full-year outlook and strength in online sales, advertising and membership revenue. The company also received tariff refunds it plans to use to lower prices.

Investors sold the stock on U.S. comparable sales that came in below expectations and guidance that did not match what Wall Street had been pricing. The reaction was not about whether Walmart is a strong company. It was about what the consumer looks like when fuel and food costs are still elevated.

Walmart has been gaining higher-income customers through pickup, delivery and its Walmart+ membership program. The company is still growing. It is also telling investors it plans to lower prices where it can, and that signal says the consumer is watching every dollar. Home Depot beat earlier in the week. Lowe’s missed. Walmart showed something in between. The consumer is not collapsing. The consumer is not comfortable either.

Crypto Is Trading Washington, Not the Bond Market

Bitcoin rose above $71,000 Thursday and gained nearly 11% in two sessions. Ether reached its highest level since May 12. Solana climbed to its strongest since May 16. The move came after Trump met with crypto executives and regulators at the White House and pushed Congress to pass the Clarity Act.

Coinbase rose nearly 7%. Strategy jumped 10%. Circle Internet gained 7.5%. Mara Holdings and American Bitcoin also moved higher. The crypto trade is running on a policy catalyst that has nothing to do with yields, oil or the consumer. Risk appetite has not disappeared from the market. It has become selective about where it shows up.

What to Watch

The market is running three separate arguments. The bond market is warning about supply, deficits and inflation that has not come back to target. Walmart put the consumer under a spotlight that showed spending still happening but pressure building underneath it. Crypto is pricing a friendlier regulatory framework out of Washington and ignoring the yield trade entirely.

The main trend across all three indexes is still up but minor trends are down and momentum has shifted to the downside with new lower tops forming. The 50-day moving averages on the Dow, S&P and Nasdaq are the levels where the market finds out whether this is a pullback or the start of something larger. The 30-year yield is back above 5.23% and that is the number that matters more than any single earnings report. Until the long bond cooperates, the stock market is fighting the most expensive cost of capital it has seen in nearly two decades.

More Information in our Economic Calendar.