Stocks fell as energy alone stayed green: Thursday recap

Wall Street fell across the board on Thursday, giving back ground in a session where selling reached nearly every corner of the market. The S&P 500 lost 0.8%, closing at 7,641.16. The Dow Jones Industrial Average dropped 1.3% to 52,759.21, shedding more than 700 points, while the Nasdaq Composite fell 0.7% to 26,067.17. Small caps lagged again. The Russell 2000, tracked by the IWM fund, slid 1.3%, trailing the large-cap gauges.

The sector map was almost uniformly red. Energy was the only real bright spot, up 0.3%, and real estate edged up 0.2%. Everything else fell. Health care was the weakest group, down 1.9%, followed by consumer discretionary at 1.6% and consumer staples at 1.4%. Industrials lost 1.2% and financials eased 0.9%. Technology held up better than most, down 0.3%. Nine of the eleven S&P sectors finished lower.

Two forces set the tone. The first was the bond market. Stocks had rallied a day earlier when the Treasury Department said it would sharply increase repurchases of longer-dated debt, a move meant to hold down borrowing costs. That optimism faded on Thursday as investors judged the plan a short-term fix rather than a lasting answer to elevated yields, with firmer energy prices adding to inflation worries. The 10-year Treasury yield held near 4.71%. Higher-for-longer borrowing costs weigh on the richly valued corners of the market that have led the advance, and the reversal pulled the major averages down with them.

The second was Walmart. The country’s largest retailer reported quarterly results before the open, beating Wall Street estimates on both earnings and revenue and lifting its full-year forecast. Investors focused instead on sales at established U.S. stores, which grew 2.6% excluding fuel, short of analyst expectations and the slowest pace in about six years. The stock fell roughly 9%, one of its worst days in years, and the disappointment rippled through consumer staples and discretionary names as a fresh read on how carefully households are spending.

Breadth ran clearly negative. The small-cap decline and the near-absence of winning sectors pointed to selling that spread well beyond the megacaps that usually drive the tape. The Cboe Volatility Index rose to 16.01, up about a point on the day, though it remained below its long-run average and well short of levels that signal real stress. Losses were broad rather than deep. No major index fell more than 1.5%, and the session read as a steady drift lower rather than a rush for the exits.

Not everything moved with the crowd. A handful of names bucked the decline, including Merck, which extended its gains from the prior day’s cancer-vaccine trial news, and several crypto-linked stocks that climbed alongside digital assets. But the winners were scattered, and they did little to offset the weight of the broad retreat.

The calendar turns next to the Federal Reserve. Chair Kevin Warsh is due to speak at the central bank’s annual symposium in Jackson Hole next week, and investors will parse his remarks for any signal on the path of interest rates after the July minutes showed a committee divided over whether policy is tight enough. Until then, the market’s focus stays split between the direction of yields and the closing stretch of the summer earnings season.

This is a general-market summary for information only — not investment advice, and not a recommendation regarding any security.