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Wall Street’s Thursday selloff was about more than Walmart. The bond market’s brief relief disappeared, oil climbed above $93, and investors received an uncomfortable set of signals from the American economy: companies are still reluctant to lay workers off and factories are getting busier, yet the country’s largest retailer says shoppers are increasingly making trade-offs.

Markets — Dow Drops Nearly 700 Points as Wednesday’s Bond Relief Vanishes

The S&P 500 closed at 7,642.69, down 0.85%. The Dow Jones Industrial Average fell 681.62 points, or 1.27%, to 52,781.43, while the Nasdaq Composite dropped 1.00% to 26,067.81.

The important move was again in bonds. The 10-year Treasury yield moved back toward 4.7% and the 30-year yield climbed again after Wednesday’s Treasury intervention had temporarily pushed long-term borrowing costs lower. Investors are increasingly questioning whether government bond buybacks can counter the larger forces pushing yields higher: government borrowing, inflation risk and enormous corporate capital needs.

Oil added another layer of pressure. Brent crude climbed 2.4% to roughly $93.78 a barrel, while U.S. crude moved above $87 as Middle East supply risks remained unresolved. Higher energy costs hit airlines, cruise companies and consumer stocks while supporting the energy sector.

Among Thursday’s major movers, Walmart fell 9.6%, Advance Auto Parts plunged 26.7%, Deere gained 6.8%, Norwegian Cruise Line dropped 5.3% and United Airlines fell 4.1%.

Retail — Walmart Just Gave the Clearest Warning Yet About the Consumer

Walmart reported its slowest comparable-sales growth in six years, with U.S. comparable sales increasing only 2.6% versus the 3.8% Wall Street expected. Store-traffic growth slowed to 1.5%, while average spending per transaction increased just 1.1%, down sharply from 3.1% a year earlier.

That is particularly significant because Walmart has been one of the biggest beneficiaries when households become more price conscious. Consumers normally trade down toward Walmart during difficult economic periods. Weakness there therefore suggests something different: some families may no longer simply be changing where they shop — they may be reducing what they buy.

Walmart said gasoline prices above $4 were forcing shoppers to make trade-offs and now expects roughly $2 billion more in fuel costs than previously forecast. The company is responding aggressively, rolling back prices on about 11,000 products, partly using $2.9 billion in tariff refunds to finance the reductions. Its e-commerce business remained much stronger, growing 24%, while advertising revenue jumped 43%.

The contradiction is important. Walmart actually raised its full-year sales and profit forecast, yet investors erased tens of billions of dollars from its market value because they were more concerned about what the quarter revealed about the consumer.

For retailers, restaurants and other consumer-facing businesses, Thursday’s Walmart report may be more useful than a government survey: the customer is still spending, but increasingly deciding what can wait.

Industrial Economy — Deere Finds a New Growth Engine in AI Data Centers

John Deere reported its first quarterly profit increase in three years, but the surprise was where much of the strength came from.

Deere’s construction and forestry sales rose 18%, becoming its fastest-growing business as spending on infrastructure and the enormous buildout of AI data centers increases demand for heavy machinery. Customer backlogs in the division now extend well into fiscal 2027.

Meanwhile, Deere’s traditional large-farm machinery business remains weak. Production and Precision Agriculture revenue declined 6% as lower crop economics continue to discourage purchases of expensive tractors and combines. Deere still believes 2026 will mark the bottom of the agricultural-equipment cycle.

That makes Deere an unusually useful window into the U.S. economy.

Farmers are pulling back while data-center builders are buying.

Deere now expects full-year net income of $4.75 billion to $5 billion, raising the lower end of its prior forecast. It also received a $110 million tariff refund during the quarter, although management expects net tariff costs of about $750 million this year and approximately $1 billion in 2027.

The AI boom is therefore no longer just creating revenue for Nvidia, chip designers and cloud providers. It is selling excavators and construction machinery.

Global Technology — Alibaba’s AI Bet Is Growing Faster Than Its Profits Can Handle

Alibaba reported a dramatic 75% decline in quarterly net profit even though revenue rose 9%.

The reason was not collapse in the underlying business. It was spending.

Alibaba is pouring enormous amounts of capital into AI infrastructure, cloud computing and chips. Capital expenditure jumped 75% to about 67.7 billion yuan, while cloud and AI-services revenue surged 45% to 48.44 billion yuan.

Alibaba has already spent roughly half of the 380 billion yuan — about $56 billion — it plans to invest in AI between 2026 and 2029. CEO Eddie Wu said the company believes those investments can reach break-even within roughly three years.

The business question is becoming familiar across the technology industry: companies no longer need to prove that AI demand exists.

They need to prove that the extraordinary amount of money required to serve that demand will eventually produce acceptable returns.

Alibaba’s U.S.-listed shares fell about 4.6% Thursday as investors confronted that arithmetic.

Economy — Factories Are Accelerating Even as Consumers Become More Cautious

Thursday’s economic data complicated the slowdown narrative.

Initial unemployment claims fell by 6,000 to 206,000 for the week ended August 15, below economists’ expectation of 210,000. Continuing claims rose to 1.799 million but remain relatively low. The picture is increasingly one of a low-hire, low-fire labor market: companies are reluctant to add workers aggressively, but they are not conducting widespread layoffs either.

Manufacturing data were considerably stronger.

The Philadelphia Federal Reserve’s manufacturing index jumped to 47.4 in August from 41.4 in July, its highest reading since April 2021. Nearly 57% of surveyed manufacturers reported increasing activity, while the employment index rose to its highest level since April 2022.

Perhaps most striking, the index measuring manufacturers’ expectations for activity six months from now surged to 73.6, its highest reading since August 1983.

But there is a catch for business owners: 38% of manufacturers said customers have become more price sensitive since last quarter. Among firms expecting near-term industry cost changes, 80% believe competitors will respond by raising prices.

That is an unusual combination — businesses are increasingly optimistic about production while becoming more aware that customers may resist higher prices.

Food Distribution — A $1 Billion Hedge-Fund Bet Puts AI Inside Sysco’s Trucks and Warehouses

D.E. Shaw has accumulated a stake worth more than $1 billion in Sysco, the world’s largest food distributor.

The investment is particularly important because the hedge fund is supporting Sysco’s attempt to use artificial intelligence, automation and technology to transform its enormous distribution network. Sysco expects those initiatives to produce roughly $100 million in savings during fiscal 2027.

Sysco is also adding directors with technology, e-commerce and food-distribution experience as it prepares for its planned acquisition of Restaurant Depot. D.E. Shaw is expected to help the company raise capital for that transaction.

For restaurants and food businesses, this is more than an activist-investor story.

AI is increasingly moving into one of the least glamorous but most consequential parts of the economy: predicting how much food businesses need, routing trucks, automating orders, managing warehouses and reducing spoilage.

Enterprise AI — Anthropic Moves to Give Businesses More Control of Their Data

Anthropic is preparing to give enterprise customers greater control over how their data are retained when using advanced Claude models, according to a person familiar with the company’s plans.

The company is also preparing a new safety system expected later this year.

For corporate AI adoption, data retention has become one of the biggest obstacles standing between experimentation and full deployment. Businesses are increasingly willing to use AI, but banks, healthcare companies, law firms, manufacturers and large corporations remain cautious about where confidential prompts, documents and outputs are stored.

Anthropic’s change shows where the enterprise AI competition is moving.

The winning model may not simply be the smartest one.

It may be the one a company’s legal, compliance and cybersecurity departments are willing to approve.

What to Watch Friday

BJ’s Wholesale Club reports Friday morning, with its earnings call scheduled for 8:00 a.m. Eastern. After Walmart’s rare sales miss, BJ’s becomes a particularly useful second reading on value-oriented consumers and whether warehouse clubs are seeing the same trade-offs in grocery, fuel and discretionary spending.

At 9:45 a.m. ET, S&P Global releases its flash August U.S. manufacturing and services PMIs. Economists are looking for manufacturing activity to remain in expansion territory around the mid-50s, making the report important after Thursday’s exceptionally strong Philadelphia Fed reading.

At 10:00 a.m. ET, the Bureau of Labor Statistics releases July state employment and unemployment figures. The report will show where the national labor slowdown is actually concentrated and could be particularly important for businesses evaluating regional hiring conditions.

Oil and Treasury yields may still matter more than any single earnings report.

If Brent remains above $90 while long-term Treasury yields continue climbing, businesses could face a difficult combination going into the weekend: expensive financing, expensive energy and a consumer who is becoming increasingly careful about every dollar.

That was Thursday’s real business story.

The economy is not collapsing. Factories are busy, layoffs remain low and AI-related investment is booming.

But the cost of running a business is rising again at precisely the moment customers are becoming harder to convince to spend.

JBizNews Desk | Wall Street

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Business Day in Review — Thursday, August 20, 2026