The Dow Jones Industrial Average suffered a steep decline on Thursday, shedding 460.09 points, or 0.86%, to close at 53,002.96. The sell-off was driven primarily by a renewed surge in long-term Treasury yields, which overshadowed a sharp drop in Walmart shares. While Walmart's 9% plunge was notable, it accounted for only about 13% of the Dow's overall loss, underscoring that the market's weakness was far more broad-based.
Walmart's stock tumbled $10.33 to $103.97, a decline of 9.04%. Because the Dow is a price-weighted index, this slide translated into a roughly 62-point drag on the index, or approximately 13.4% of the total drop. The remaining 398 points of decline reflect a wider repricing of equities as yields on longer-dated government bonds marched higher.
The 10-year Treasury yield climbed to around 4.71%, while the 30-year yield advanced to 5.25%. Both gave back most of the relief seen during Wednesday's buyback-driven gains. Treasury Secretary Scott Bessent indicated that long-bond buybacks could exceed $4 billion per operation, stating, "We have a big tool kit." Despite these assurances, yields continued to rise, suggesting investors are looking for clearer fiscal signals rather than additional liquidity measures.
Walmart's Mixed Quarter
Walmart reported a mixed set of results for its fiscal second quarter. Adjusted earnings per share came in at $0.81, surpassing analyst forecasts, while revenue climbed approximately 6% to $187.94 billion. However, U.S. comparable sales rose just 2.6%, well below the 3.8% that the market had anticipated. This marked Walmart's first comparable sales miss in over five years, a significant disappointment for investors.
The company attributed the shortfall to reduced store visits and ongoing financial strain among lower-income consumers. In response, Walmart has lowered prices on 11,000 products and secured $2.9 billion from tariff reimbursements. On a brighter note, U.S. e-commerce sales grew 24%, and its advertising business, Walmart Connect, saw a 43% surge, highlighting continued strength in higher-margin digital segments.
Guidance Disappoints
Walmart's forward guidance also came in below expectations. The company guided third-quarter sales growth of 3.0% to 3.75%, compared with the Street's forecast of 4.9%. Adjusted EPS guidance for the third quarter was set at $0.62 to $0.64, versus the consensus of $0.67. This softer outlook added to the negative sentiment surrounding the stock.
Market Context and Analyst Views
Despite the sell-off, many analysts remain constructive on Walmart. The consensus price target before Thursday's drop was approximately $138, implying significant upside from current levels. KeyBanc has a Buy rating with a $145 target, UBS also rates it Buy with a $141 target, and Bernstein maintains a Buy with a $142 target. Oppenheimer holds a more cautious Hold rating with a $111 target. These targets suggest that the market may be overreacting to the quarterly report, though they do not yet incorporate the weaker guidance.
The broader market's decline was not confined to Walmart. The S&P 500 slipped 0.44% to 7,673.91, and the SPDR Dow Jones Industrial Average ETF Trust (DIA) fell 0.86% to $529.69. Rising yields are putting pressure on growth and technology stocks, as higher discount rates reduce the present value of future earnings.
Investors are now closely watching whether the 10-year yield can sustain levels above 4.70%. A prolonged breach could trigger further valuation compression across the index. Meanwhile, Walmart's revised analyst targets and its ability to navigate a challenging consumer environment will be key indicators in the coming weeks.
Risks remain tilted to the downside if yields continue to climb or if economic data weakens. However, a rebound in Walmart shares could help offset some of the Dow's losses, though it would not fully compensate for the broader 399-point decline excluding Walmart's impact.
