Stocks Fall as Bond Yields Rise | The Close 8/20/2026

Summary

The program covers a mixed day for markets, with stocks falling as long-term bond yields rise. Guests discuss the drivers of higher yields, the state of the US consumer through the lens of retail earnings from Walmart and Ross Stores, and the sustainability of the AI-driven equity rally. A former Fed president warns of an equity bubble set to pop in 2027, while other strategists remain bullish on stocks due to strong corporate earnings.

• Stocks closed lower, with the S&P 500 down nearly 1%, as long-term Treasury yields continued to climb.
• Walmart shares plunged after reporting their slowest US sales growth in six years, raising concerns about the lower-income consumer.
• Ross Stores shares jumped after hours on a strong earnings beat and a very optimistic forecast, suggesting strength in the off-price retail sector.
• Former NY Fed President Bill Dudley argued that the US equity market is in a bubble, citing stretched valuations and an expected slowdown in the AI investment boom.
• Other guests expressed bullishness on equities, pointing to strong corporate earnings guidance and expanding profit margins.
• The luxury consumer market shows signs of selectivity, with brands like Ralph Lauren outperforming due to disciplined execution and value perception.
• Japan is highlighted as an attractive investment area, particularly its banking sector, which is set to benefit from rising interest rates.
• The ongoing AI buildout and its financing through heavy corporate debt issuance were discussed as both a growth driver and a potential source of market instability.