The S&P 500 Index ($SPX) (SPY) fell -0.87% on Thursday, while the Dow Jones Industrial Average ($DOWI) (DIA) dropped -1.32% and the Nasdaq 100 Index ($IUXX) (QQQ) declined -0.72%.
All three major indexes settled at multi-week lows, with the S&P 500 and Nasdaq 100 hitting two-week lows and the Dow touching its weakest level in two and a half weeks.
Rising oil prices were the central driver of Thursday’s selloff, stoking inflation fears and pushing bond yields sharply higher across the session.
WTI crude climbed more than 2% to a one-month high after President Trump threatened Iran and its trading partners with sweeping economic isolation, dimming hopes for a resolution to the ongoing conflict.
Trump warned that any country allowing its financial institutions, businesses, airports, or government entities to provide any type of lifeline to Iran would itself face “tremendous consequences,” though he stopped short of specifying targets or measures.
Treasury Secretary Bessent said the administration would announce its full plan to isolate Iran and its trading partners on Monday, with the economic measures expected to complement the existing US naval blockade of Iranian ports.
Trump also said he has no timeline for resolving the US-Iran conflict and is not interested in extending the expired agreement with Iran, further clouding prospects for a swift reopening of the Strait of Hormuz.
An Iranian military spokesperson stated that no ship can safely pass the Strait of Hormuz without Iran’s authorization and supervision, calling Trump’s claims of control over the strait “nothing more than lies.”
The 10-year T-note yield rose approximately 4.5 basis points to 4.682%, as surging crude prices lifted the 10-year breakeven inflation rate to a two-and-a-quarter-month high of 2.355%.
Walmart (WMT) was among the session’s biggest losers, sinking more than 9% after reporting Q2 US-only comparable store sales growth of just 2.60%, well below the consensus estimate of 3.67%, and forecasting full-year adjusted EPS of $2.80 to $2.87, beneath the consensus of $2.90.
Federal Reserve commentary was divided on Thursday, adding to market uncertainty around the near-term rate outlook heading into September’s policy meeting.
St. Louis Fed President Alberto Musalem said he would have preferred to raise interest rates at the July FOMC meeting to combat still-high inflation, taking a notably hawkish stance.
San Francisco Fed President Mary Daly offered a counterpoint, saying the US Treasury market is signaling that monetary policy is in a good place right now and that she is “not seeing evidence” of a need for preemptive Fed rate hikes.
Markets are currently pricing in a 35% probability of a 25 basis point rate hike at the September 15-16 FOMC meeting.
Despite the broad market pressure, Thursday’s US economic data came in ahead of expectations, with weekly initial unemployment claims falling an unexpected 6,000 to 206,000 against forecasts of a rise to 210,000.
The August Philadelphia Fed business outlook survey surged an unexpected 6.0 points to 47.4, a five-and-a-quarter-year high, far exceeding the consensus expectation of a decline to 24.8.
Cybersecurity stocks took a notable hit after Axios reported that CrowdStrike (CRWD) CTO Zaitsev is leaving the company to launch an AI-cyber fund, sending shares down more than 5%.
Okta (OKTA), Zscaler (ZS), and Cloudflare (NET) each fell more than 4%, while Palo Alto Networks (PANW) dropped more than 2% and Fortinet (FTNT) shed more than 1%.
Airline and cruise operators were also punished by the oil spike, with Carnival (CCL) losing more than 5% and Royal Caribbean Cruises (RCL) falling more than 4%.
Cryptocurrency-linked stocks bucked the broader trend, with MARA Holdings (MARA) surging more than 15% and Strategy (MSTR) climbing more than 7% to lead Nasdaq 100 gainers as Bitcoin rose more than 5% to a two-and-a-half-month high.
Deere & Co (DE) rose more than 6% after reporting Q3 net income of $1.38 billion, topping the consensus of $1.27 billion, and raising its full-year net income outlook to a range of $4.75 billion to $5.00 billion.
On the earnings front, the S&P 500 is tracking Q2 earnings growth of nearly 32%, well above the initial projection of 23%, with 86% of the 465 companies that have reported so far beating estimates, according to Bloomberg data.
