CNBC

Lead Story

The defining story of the day is the failure of the U.S. Treasury’s upscaled debt buyback program to contain surging bond yields, as the U.S. national debt crossed the historic $40 trillion mark. Despite Treasury Secretary Scott Bessent’s attempt to “make a market” and signal that yields do not reflect fundamentals, long-dated yields quickly rebounded, sending the major stock averages tumbling and ending a brief relief rally.

Markets & Economics

A relentless rise in bond yields and oil prices hammered the major stock indexes on Thursday, with the Dow Jones Industrial Average dropping 1.3% (or 700 points), the S&P 500 falling nearly 0.9%, and the Nasdaq Composite shedding 1%. During an exclusive interview, Treasury Secretary Scott Bessent defended the upscaled buyback program, noting it could exceed the planned $4 billion limit per issue to address “very poor” liquidity in the 30-year bond, which traded around 5.235%. Yields on the benchmark 10-year note climbed to 4.704%, fueled in part by Brent crude rising 2.9% to $94.31 per barrel following President Donald Trump’s declaration of “Economic Warfare” against Iran. Bessent previewed an “Economic D-Day” pressure campaign, warning in a Squawk on the Street interview that the U.S. will impose maximum sanctions to isolate the Iranian regime rather than restart large-scale combat. Adding to the hawkish tone, former Cleveland Fed President Loretta Mester warned that markets are struggling to interpret new Fed Chairman Kevin Warsh’s plans, noting a rate hike remains appropriate if inflation persists.

Business & Earnings

Walmart’s stock tumbled 9% despite posting a top-and-bottom-line beat, as U.S. same-store sales grew just 2.6%—well below the 3.5% Wall Street expected—stoking widespread concern about consumer resilience. In an interview with John David Rainey, the Walmart CFO explained that although e-commerce surged 23% and the firm holds a $2.9 billion tariff refund, consumers are “stretched thin” by energy prices. Technology headlines were dominated by Micron, whose stock rose 4% as CEO Sanjay Mehrotra pushed back against the memory cycle bear case, declaring HBM memory to be the “strategic infrastructure” of AI rather than a simple component. Additionally, California Attorney General Rob Bonta noted in a detailed antitrust update that settling the states’ lawsuit to block the Paramount-WBD merger would require “robust structural remedies”. Elsewhere, Hyundai CEO José Muñoz told CNBC that the South Korean automaker plans to raise Georgia Metaplant production capacity from 500,000 to between 700,000 and 800,000 units by 2028, accelerated by a 15% tariff on South Korean imports.

Investing & Commentary

Investors looking to hedge against a sustained rise in yields should eye the energy sector, which shows the strongest inverse correlation to long-term Treasurys, led by ConocoPhillips, Permian Resources, and ExxonMobil. Morgan Stanley’s Lauren Hochfelder suggested in a Squawk on the Street segment that industrial real estate is a highly viable “side-door way” to play the AI boom due to massive warehouse demand from hyperscalers. Meanwhile, Fundstrat’s Tom Lee highlighted JPMorgan Chase (poised to cross a $1 trillion market cap) and Lumentum Holdings as top core stock picks for the fall, while recommending investors avoid Robinhood Markets due to slumping crypto trading volumes.

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📈 Next Step: We can run an in-depth correlation analysis on more sector indexes against the 20+ Year Treasury Bond ETF (TLT) to build a robust portfolio roadmap for this high-yield environment.