NEW YORK – The Nasdaq Composite fell 0.8% by midday Thursday as the 10-year Treasury yield climbed to 4.70%, a level that continues to pressure growth-oriented valuations. The decline was broad-based, with decliners outnumbering advancers on the Nasdaq by a 1.68-to-one ratio, according to data from the Associated Press.
Walmart Inc. (NYSE: WMT) slumped 9.4% after reporting its slowest U.S. comparable sales growth in six years, but the retail giant's impact on the tech-heavy index was more muted than its share price might suggest. With a 2.41% weighting in the Invesco QQQ Trust (NASDAQ: QQQ), Walmart's decline contributed an estimated 0.23 percentage points to the index's move.
That estimate, based on the fund's August 17 weighting and Thursday's midday stock move, underscores that the broader market's slide was driven more by interest-rate dynamics than by a single earnings miss. The 10-year Treasury yield's rise to 4.70% raises the discount rate applied to future corporate profits, making growth stocks—particularly those with longer-duration cash flows—more vulnerable.
Rate Concerns Dominate
“As the yields start to continue to move up, equity investors will continue to have a problem with it,” said Joe Saluzzi, co-manager of trading at Themis Trading. His comment reflects the market's sensitivity to rising long-term rates, which have been a persistent overhang on equities.
The 30-year Treasury yield also advanced to 5.239%, while oil prices rose nearly 2%, adding to inflation concerns. These factors combined to create a challenging environment for stocks, particularly those in the technology and consumer discretionary sectors.
Walmart's Earnings Signal
Walmart's quarterly results provided a sobering read on consumer behavior. U.S. comparable sales increased 2.6%, the slowest pace in six years, while total revenue came in at $187.94 billion. Adjusted earnings per share were 81 cents, and the company maintained its full-year adjusted EPS guidance at $2.80 to $2.87, below the $2.90 analysts had expected.
The retailer's performance is often viewed as a barometer for the broader consumer economy, and the slowdown in store sales has raised questions about the health of discretionary spending. However, Wall Street analysts remain largely constructive on Walmart, with a consensus rating of Buy and an average price target of $137.65, according to S&P Global data.
Tech Giants Show Divergence
Within the QQQ, the largest constituents—Nvidia (NASDAQ: NVDA), Apple (NASDAQ: AAPL), and Microsoft (NASDAQ: MSFT)—collectively account for over 21% of the fund's weight. Nvidia and Apple posted gains in early trading, helping to limit the overall decline, while Amazon (NASDAQ: AMZN) and Tesla (NASDAQ: TSLA) were down.
This divergence suggests that the selloff is more about rates than a broad reassessment of artificial intelligence demand. Nvidia, Microsoft, and Amazon each carry a Strong Buy consensus, while Apple's rating is more tepid at Buy. The analyst community remains optimistic on these names, but higher yields could challenge even the most robust earnings outlooks.
Market Outlook
The U.S. Treasury's plan to increase long-term debt buybacks from $2 billion to at least $4 billion starting September 9 has done little to allay concerns about debt supply. Investors are watching whether the 10-year yield can hold near 4.70% or if it will continue to climb, which would put further pressure on valuations.
For now, the market is caught between solid corporate earnings and the gravitational pull of rising rates. A pullback in yields could relieve some pressure, but a continued advance would likely test the resilience of even the highest-conviction growth names.
