21.08.202612:41 Forex Analysis & Reviews: Market stumbles over yields

Price discounts everything, and the stock market proved it clearly. Wall Street flinched as Treasury yields crept higher again, and a disappointing Walmart report reminded investors that the American consumer is tiring under the weight of the economy.

Dynamics of US stock indices

The Dow Jones lost 1.3%, the Nasdaq fell 1%, and the S&P 500 retreated 0.9%. The main culprit was Walmart: its stock plunged 9.2% — the worst trading day in years — after the company reported US comparable?store sales growth of just 2.6%, the weakest in six years. Meanwhile Brent crude gained 3.4%, approaching $95/bl, after Donald Trump's threats to launch an "economic war" against Iran.

The 10-year Treasury yield, which is closely correlated with oil prices, again turned into a headwind for stocks. Treasury Secretary Scott Bessent tried to calm markets by increasing buyback volumes — he said operations could exceed $4 billion per trade, double current levels. But the effect was temporary: Treasury yields returned to multi?year highs, and hyperscalers such as Nvidia, whose growth increasingly depends on debt?funded AI infrastructure, came under renewed pressure.

Downtrend of Nasdaq 100

A market of two moods

At the same time, the market feels like it's living a double life. Global fund managers, according to Bank of America, have 56% of portfolios in equities — the highest since November 2021. Bulls keep buying even though the same survey named the "disorderly rise in bond yields" the second-biggest risk after fears of an AI bubble. A quarter of respondents fear a new wave of inflation. Classic FOMO — fear of missing out — is still outweighing caution.

UBS sees it optimistically: 35–40% corporate profit growth could push the S&P 500 to new highs, with a target around 8,100. Still, the bank warns the picture will be murkier after 2027, and corporate margins could come under pressure. Today, analysts' words are cheaper than usual — the market lives in an escalation/ de-escalation mode where any forecast can be wiped out by a single line in a yields report.

So, the market is balancing between euphoria over profit forecasts and the rising cost of borrowing. The dollar is weakening, oil is rising, yields are climbing — three forces pulling equities in different directions at once.

Will the S&P 500 bull market withstand this strain, or will yields ultimately prevail? I doubt we'll have an answer before earnings season ends.

Technically, on the daily chart, bears have reclaimed fair value. The first of the two previously indicated bearish targets — 7,666 and 7,610 — has already been hit; the second is on its way.