U.S. stocks closed broadly lower on Thursday, reversing the prior session's brief rebound as a recovery in long-term Treasury yields negated the impact of an expanded debt buyback program, while a disappointing sales report from retail giant Wal-Mart dragged the Dow Jones Industrial Average down by more than 700 points.

The Dow fell 703.84 points, or 1.32%, to settle at 52,759.21, with Wal-Mart accounting for the bulk of the decline after its shares plummeted roughly 9%. The S&P 500 dropped 0.87% to 7,641.16, while the Nasdaq Composite slid 1% to 26,067.17. All three major indices ended a three-day losing streak on Wednesday, only to resume their downward trajectory on Thursday.

Investor sentiment was rattled by renewed upward pressure on long-dated bond yields, higher oil prices stemming from heightened U.S.-Iran tensions, and growing concerns that elevated financing costs are beginning to brake the current bull market rally.

Bond Buyback Expansion Fails to Cap Yields

On Wednesday morning, the Treasury Department announced it would at least double the size of its liquidity support buyback operations for nominal securities with maturities ranging from 10 to 30 years, raising the per-operation cap from $2 billion to at least $4 billion, with the program window set to run from September 9 through November 4. The announcement initially pushed long-term yields lower, with the 30-year Treasury yield retreating roughly 9 to 10 basis points from near two-decade highs, and the 10-year yield also easing, helping stocks close in positive territory.

However, that buying momentum faded on Thursday. The 10-year Treasury yield climbed more than 5 basis points to 4.704%, surpassing levels seen before the buyback announcement, while the 30-year yield also rose over 5 basis points to 5.248%. Earlier this week, the 30-year yield touched its highest level in nearly 20 years.

Treasury Secretary Scott Bessent said in an interview Thursday that the buyback program could exceed the announced $4 billion, adding that current yields do not reflect fundamentals and that the Treasury would act as a market maker given the thin liquidity in 30-year securities. Yields briefly dipped following his comments before resuming their upward climb.

Adam Phillips, managing director of investments at EP Wealth Advisors, expressed skepticism about the durability of the buyback's impact. "This is not a cure for the bond market's underlying ailment. There are structural forces at play here that go far beyond what the Treasury or the government can control," he said. Phillips noted that similar interventions in the past have typically provided only short-lived relief, and that "sustained improvement would require much larger measures."

The core concern among investors is that the buyback program does not reduce net debt issuance—it merely shifts duration pressure from the long end to the short end of the curve. With U.S. Treasury debt outstanding surpassing $40 trillion this week, deficit financing and refinancing needs remain intact, while corporate bond issuance, sticky inflation, and global selling of long-dated bonds continue to exert upward pressure on yields. Some analysts have likened the situation to "piling up sandbags when the flood has already arrived."

Wal-Mart's Slowest Same-Store Sales in Six Years Disrupts Consumer Narrative

Retail giant Wal-Mart was the biggest drag on the Dow on Thursday. The company reported U.S. comparable sales—which include both store and digital channels—grew just 2.6%, falling short of the roughly 3.8% analysts had expected. This marked the slowest growth rate in six years and the first miss on this key metric in at least five years. Even after excluding the impact of Medicare drug price negotiations on its pharmacy business, core comparable sales grew approximately 3.4%, still below market expectations.

The stock fell as much as 10% during the session and closed down about 9%, marking its worst single-day performance in over four years. The decline weighed heavily on both consumer staples and consumer discretionary sectors.

Revenue and profits themselves were not weak: quarterly revenue reached approximately $187.9 billion, up nearly 6% year-over-year, while adjusted earnings per share came in at $0.81, above the $0.74 consensus estimate. The company also raised its full-year net sales growth guidance to 4% to 5% and lifted its operating profit outlook.

However, the company's third-quarter adjusted EPS guidance of $0.62 to $0.64 fell short of the roughly $0.68 market consensus. Management also flagged that higher oil prices would add approximately $2 billion in additional cost pressure. CFO John David Rainey noted that with gasoline prices rising above $4 per gallon, consumers are beginning to make trade-offs, with a noticeable slowdown in average ticket growth.

For the broader market, Wal-Mart is more than just a Dow component—it serves as a barometer for spending among middle- and lower-income households. The deceleration in same-store sales, combined with rising oil prices, reinforces the narrative that consumers are pulling back on discretionary spending, which resonates with higher mortgage and auto loan rates.

U.S.-Iran Tensions Lift Oil Prices, Rekindle Inflation Fears

Another source of pressure on equities came from the energy complex. West Texas Intermediate crude for October delivery rose nearly 3% to $86.83 per barrel, while Brent crude gained over 2% to $93.78. The trigger was renewed tensions between the U.S. and Iran. President Trump posted on Truth Social on Wednesday that the U.S. would launch "the most severe economic actions ever taken against any country," describing it as an "economic war and isolation on an unprecedented scale." Bessent echoed that sentiment on Thursday, stating that Washington would implement "the toughest sanctions in history."

Higher oil prices directly lift inflation expectations and provide another reason for long-term yields to remain elevated. Rising energy costs also continue to squeeze disposable budgets for lower-income households, corroborating the consumer signals coming from Wal-Mart.