US stocks closed lower on August 21st as a rebound in long-term Treasury yields erased earlier gains tied to buyback optimism. Walmart tumbled nearly 9%, dragging the Dow Jones Industrial Average down by more than 700 points. Meanwhile, the Nasdaq Golden Dragon China Index (HXC) slipped 1.15% as most popular Chinese ADRs declined. On the day's highest-volume names, Micron advanced 3.97% following the announcement of its new Micron Research Labs, backed by a planned $10 billion investment over the next decade. European equities also closed slightly lower, extending their longest losing streak since 2023, while German bunds pared gains and both UK and US government bonds moved lower in tandem.
In macro news, Treasury Secretary Bessent indicated that the department's bond buyback program could expand beyond $40 billion, with new fiscal measures to be unveiled. He also stated that heightened US economic pressure on Iran is unlikely to lead to a large-scale military conflict, and plans to reveal a strategy to isolate Iran's economy next week. St. Louis Fed President touched on bond market turbulence, asserting that market confidence in the Fed's credibility remains intact. Elsewhere, UK banking heavyweights jointly warned against further tax increases, while US housing affordability deteriorated for the first time since 2023, and Canadian producer prices rose in July, driven by gasoline and diesel costs.
In corporate developments, Anthropic's initial public offering is expected to match or even surpass the record set by SpaceX. Arctos Capital agreed to acquire a 10% stake in the Atlanta Falcons, valuing the team at $10.6 billion. Shares of SpaceX retreated toward their offering price as 319 million newly unlocked shares hit the market. Two Sigma reportedly lost a significant investor amid disputes between its co-founders. Following a visit to Fremont, JPMorgan noted that Tesla is deliberately refraining from adding the Model Y, focusing its Robotaxi bets on the Cybercab. Walmart's US same-store sales growth hit a six-year low, causing its stock to plunge over 9%. Marvell surged 8% on an AI chip deal that allows Google to purchase up to $12.2 billion in shares. Moderna's Phase III personalized cancer vaccine trial met its endpoints, though the stock gave back nearly a quarter of its century-level surge.
Commentary highlights included JPMorgan warning that doubling down on long-duration bond buybacks could lift yields rather than suppress them. A 40-year bond market veteran reduced risk exposure to its lowest level in over a decade, advising against excessive greed. St. Louis and San Francisco Fed officials both weighed in on bond market conditions, with the latter seeing no challenge to Fed policy credibility. A view roundup suggested buying 20-year Treasuries, as increased buybacks signal a peak in yields, while younger investors remain hostile to AI. TS Lombard cautioned that the US buyback program resembles yield curve control, posing risks for the dollar. Citi turned bearish on the dollar in the short term after previously warning of buyback risks. Secretary Bessent is set to hold a press conference on the 24th to detail actions against Iran. In other news, the Trump administration is advancing new cryptocurrency regulations, though a key bill faces hurdles in Congress, and foreign student applications to US universities saw their steepest decline in nearly a decade.
In commodities and currencies, oil prices climbed to a near one-month high on geopolitical tensions from increased US economic pressure, while gold traded uncertainly. The dollar recouped some losses posted after the buyback announcement, and the yen fluctuated. Loss of predictability in US debt management strategy has investors warning of rising government financing costs. The S&P 500 resumed its decline as the buyback boost faded, and the Treasury yield curve showed a distorted flattening following the announcement of an expanded repurchase program.
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