Stocks Struggle as Long-Term Yields Rise: Stock Market Today
Fear of a Fed move to tighten monetary policy has receded, but market-based interest rates are still trending higher.
The main equity indexes were down after a low-volume late-summer trading session on Monday, as the uncertainty of war in the Middle East outweighed the certainty of solid earnings and revenue growth. Investors, traders and speculators are pulling back bets on rate hikes after cooler-than-forecast July consumer inflation and retail sales data. But the bond market continues to reflect longer-term concerns.
President Donald Trump urged Iran to "put up the white flag of surrender" in a pre-opening bell phone conversation with Fox News, during which he also threatened to bomb Oman if it "gets in the way" of U.S. negotiations to open the Strait of Hormuz.
"The number one Goal is, and always will be, that Iran cannot have, in any way, shape, or form, a Nuclear Weapon," Trump posted on Truth Social at around the same time. "I have no time schedule," a multitasking Trump told Fox News. "I'm not in a hurry."
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The front-month West Texas Intermediate crude oil futures contract was higher by 2.5% to $84.45 per barrel. WTI declined to $67.04 intraday on July 2, just above its pre-war closing price of $67.02 on February 27 and vs a 52-week high of $119.48 on March 19.
The 2-year Treasury yield rose from 4.171% on Friday to 4.182% today, though the indicator of short-term Fed intentions has come down about 20 basis points from a 52-week high of 4.377% on July 24.
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The 10-year Treasury yield ticked up to 4.724% from 4.696% on Friday, and the 30-year Treasury yield was up from 5.266% to 5.310%, reaching a new 19-year high in the process.
By the closing bell, the blue-chip Dow Jones Industrial Average was down 0.5% to 53,459, the broad-based S&P 500 had lost 0.5% to 7,745, and the tech-heavy Nasdaq Composite was off 0.3% to 26,644.
How healthy are earnings
Most of the S&P 500 has already reported, and results from the earnings calendar are good. Indeed, as Ritholtz Wealth Management research associate Matt Cerminaro calculates, the overall year-over-year earnings growth rate is tracking to 32.2%.
In the aftermath of an unexpected decline in retail sales in July, reports from Home Depot (HD, -0.2%) tomorrow morning and Walmart (WMT, -0.8%) on Thursday morning will offer more color about the state of the consumer.
Still, as Cerminaro notes, 10 sectors are expected to report earnings growth, and eight are expected to post double-digit growth. And that bottom-line growth rate: "Talk about running it hot," Cerminaro says. "That number is on fire."
Indeed, all 11 stock market sectors defined by S&P Global are on track to grow revenue, with an overall annual rate for the S&P 500 of 15.4%, the strongest rate since the fourth quarter of 2021.
That's not all: "These companies are crushing estimates, raising guidance, and their stock prices are following suit. It's exactly what you want to see in a healthy bull market."
Why AMZN can hit $500
Amazon (AMZN, -0.5%) has had only a so-so 2026 so far. The e-commerce giant, cloud computing juggernaut and bellwether consumer discretionary stock posted a total return of 13.8% through Friday vs 14.5% for the S&P 500.
AMZN is trading around $260 today, up from around $230 at the end of 2025. According to Morgan Stanley analyst Brian Nowak, there's reason to believe the stock could hit $500 by the end of 2027, most notably on the opportunity for Amazon Web Services.
"We can debate the long-term margins of a GenAI enabled AWS," Nowak writes, "but if AMZN management's comments on AI tracking toward similar margins and returns as core cloud are in the right ballpark, this likely implies ~30% EBIT margins."
According to Nowak, that means about $1 trillion of AWS revenue and approximately $300 billion AWS EBIT (earnings before interest and taxes) over the next eight to 10 years. "Layering in reasonable Retail assumptions, this would imply AMZN is set to generate approximately $500 billion of EBIT in 2034-2036 … and that company wide EBIT could CAGR at a 16-20% rate."
The analyst reiterated his Overweight (Buy) rating, as well as his $335 12-month target price. Even from Nowak's "base case," there's about 29% of upside from here for AMZN.
What made SNDK pop again
Sandisk (SNDK, +8.9%) was the hottest of S&P 500 stocks on Monday in the aftermath of a warmly received "investor day" presentation last Thursday highlighted by management's long-term guidance, as well as an ambitious stock buyback plan.
As Bernstein analyst Mark Newman reports, management of the memory device and solution provider forecast mid- to high-teens volume growth and stable pricing through fiscal 2030. "The company also guided long-term gross margin around 80%," Newman writes, "which was better than expected."
Sandisk also announced that 100% of free cash flow (FCF) will be returned to shareholders and hinted that most, if not all, of this FCF will be used to buy back shares.
"Using even the most conservative of estimates for free cash flow," Newman says, "Sandisk can buy back 47% of shares outstanding in the next four years of free cash flow generation at current share prices."
Newman reiterated his Overweight (Buy) rating and his $3,000 12-month target price for SNDK.
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