The S&P 500 fell 0.8% Thursday as Treasury yields erased Wednesday’s buyback relief. Brent pushed toward $92 after Washington unveiled a broader economic-isolation campaign against Iran. Bitcoin surged above $77,000 as ETF inflows, short liquidations and fresh crypto policy headlines hit at once.
Thursday erased most of Wednesday’s relief.
The S&P 500 fell 0.8% to 7,641, the Nasdaq dropped 1%, and the Dow lost 1.3%. The VIX rose 7.5% to 16.01. Walmart (WMT) fell more than 9% after reporting slower U.S. comparable sales despite beating earnings and raising its full-year outlook.
The bigger pressure came from bonds.
Treasury’s expanded buyback plan had pushed long yields sharply lower Wednesday, but the move lasted one session. The 10-year Treasury yield climbed back near 4.70%, while the 30-year returned to roughly 5.25%.
Asia traded the earlier relief instead.
Japan’s Nikkei rose 1.2%, while South Korea’s Kospi gained roughly 6%. U.S. futures then turned lower again overnight as the yield rebound resumed.
Three events now define the next stretch. Nvidia (NVDA) reports Tuesday. Fed Chair Kevin Warsh speaks at Jackson Hole on August 28. Bitcoin holding above $70,000 has become a market test of its own.
The Signal
Treasury bought the market one day of lower yields. Thursday showed that the bond market still wants a higher price for long-term capital.
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Washington moved from threatening Iran to trying to isolate its economy.
Trump announced a broad package targeting Iranian banks, shipping registries, smuggling networks, currency channels and cash transfers. WTI rose 2.7% to roughly $86.70, its highest level since July 24, while Brent pushed toward $92 and is up more than 4% this week.
The measures follow the UAE suspending financial ties with Iran after missile attacks on its territory. The U.S. naval blockade remains in place, while Washington and Tehran continue giving competing accounts of how open the Strait of Hormuz really is.
The important shift is policy. Diplomacy is no longer the main tool. Economic isolation is.
That does not immediately remove barrels from the market. It raises the cost and risk of moving them, while increasing the chance Iran responds through shipping, regional allies or another military escalation.
Energy Signal
The U.S. is now trying to squeeze Iran financially instead of negotiating first. Oil is pricing the higher cost before it prices any actual supply loss.
The July Fed minutes looked more hawkish than the vote alone suggested.
The FOMC held rates in their last meeting at 3.50% to 3.75% in a 9-3 decision. Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari and Dallas Fed President Lorie Logan wanted an immediate 25-basis-point hike. The minutes showed the concern went beyond those three, with more officials open to tightening if inflation failed to fall.
The data since then has softened.
July payrolls contracted and inflation cooled, pulling September hike odds down to roughly 31% from about two-thirds earlier.
The bond market is less relaxed. Treasury’s plan to double long-bond buybacks briefly pulled the 30-year yield away from its highest level since 2007. Thursday it climbed back to around 5.25%, while the 10-year returned to 4.70%.
Warsh now has to explain the gap at Jackson Hole.
Macro Signal
The Fed minutes describe a committee leaning toward tighter policy. Recent data argues for patience. Long yields are refusing to wait for either side to settle the argument.
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SpaceX completed its roughly $60 billion acquisition of AI coding startup Cursor on August 14, issuing about 389 million new shares. The stock traded near $139.65 Thursday, back above its $135 IPO price. Another 319 million insider shares become eligible to trade on September 9.
The chip trade remains active. Marvell (MRVL) surged nearly 10% Wednesday as investors focused on custom silicon demand tied to Google’s TPU roadmap.
The consumer picture is weaker.
Walmart fell more than 9% even though revenue beat expectations and guidance rose. U.S. comparable sales increased 2.6%, short of the 3.5% expected, as shoppers stayed sensitive to fuel and food costs.
Deere (DE) offered a different read. Fiscal third-quarter EPS came in at $5.10 versus $4.79 expected, while order trends suggested 2026 may mark the bottom of the farm-equipment cycle.
Capital Signal
AI companies are still spending through higher yields. Consumers are becoming more selective. The market is rewarding the first story and discounting the second.
Bitcoin finally broke out of its summer range.
BTC surged from the mid-$60,000s to above $77,000 in roughly 24 hours. More than $3 billion in leveraged positions were liquidated, mostly shorts caught on the wrong side of the move.
The rally had three drivers. Treasury’s bond-buyback announcement briefly eased yields. The SEC advanced its Regulation Crypto Assets proposal. Trump also pushed Congress to move the CLARITY Act while backing a possible U.S. pathway for Hyperliquid.
ETF demand added substance. U.S. spot Bitcoin ETFs pulled in $517 million Wednesday, their strongest day since May, taking three-day inflows close to $1 billion. BlackRock’s (BLK) IBIT led the move.
Ether climbed above $2,250, while XRP gained roughly 20%.
CryptoQuant also reported that spot and perpetual-futures demand turned positive together for the first time since Bitcoin’s October peak. That matters because the initial move was driven by forced buying. Sustained spot demand is what keeps it alive.
The Verdict
The short squeeze started the breakout. ETF and spot demand now have to defend it. Holding $70,000 matters more than touching $77,000.
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Thursday produced the clearest split of the week.
Stocks fell as long yields snapped back. Walmart showed the consumer is still spending, but with less force. Washington shifted Iran policy toward economic isolation, pushing oil higher again.
Bitcoin moved the other way.
That is the part worth watching. The same yield pressure hurting equities did not immediately break crypto because forced buying, ETF inflows and policy optimism arrived together.
The next test is less dramatic. Bitcoin needs to stay above $70,000 after the squeeze fades. Nvidia needs to show the AI spending cycle still earns its cost of capital. Warsh then has to explain why the July Fed sounded hawkish while September odds now lean toward a hold.
Jackson Hole is one week away. The bond market has already started asking the questions.