BUSINESS

U.S. Stocks Plunge & Debt Hits $40 Trillion in Bond Market Turmoil

PUBLISHED Aug 21, 2026, 7:05 AM ET

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U.S. stocks fell sharply on Thursday as Treasury yields rebounded, oil prices climbed and investors reassessed the outlook for inflation and federal borrowing. The Dow Jones Industrial Average dropped 703.84 points, or 1.32%, while the S&P 500 fell 0.87% and the Nasdaq Composite lost 1%. The decline followed a brief rally after Treasury Secretary Scott Bessent announced larger purchases of longer-dated Treasury securities. Treasury said the buyback operations will rise to at least $4 billion per operation beginning Sept. 9. The U.S. national debt also surpassed $40 trillion, according to Treasury data, underscoring the scale of federal borrowing. Bessent said the milestone itself was not decisive and argued the economy could grow faster than the debt. Meanwhile, Brent crude settled at $93.78 as the Iran conflict disrupted energy markets. Walmart shares fell 9.2% after weaker comparable-sales growth and cautious guidance intensified concerns about consumers and broader corporate earnings expectations weakened.

By Emily Rhodes | JQJO News

Timeline of Events

On March 2026, debt reached $39 trillion, Treasury data showed.
On August 18, debt exceeded $40 trillion, Treasury data showed.
On August 19, Treasury doubled long-end buybacks to $4 billion.
On August 19, bond yields fell after Treasury announced buybacks.
On August 20, Treasury yields rebounded, reversing Wednesday's temporary relief.
On August 20, Dow fell 703 points, marking three-week decline.
On August 20, Walmart shares plunged 9.2% after disappointing sales.
On August 20, Brent crude settled at $93.78 amid war.
On coming days, investors will monitor Treasury yields and inflation.
Over coming months, deficits may keep long-term borrowing costs elevated.
Over coming months, Fed policy could remain sensitive to inflation.
Over coming years, interest costs could constrain federal budget flexibility.

News Intelligence

Immediate US impact: Higher yields raise borrowing costs and pressure stocks.
Possible long-term US impact: Persistent deficits could constrain fiscal flexibility and sustain elevated borrowing costs.
Reader priority: Readers should prioritize primary data, filings, Treasury statements, and independently sourced market reporting.
Most Affected: Investors, borrowers, consumers, retailers, businesses, Treasury, Federal Reserve, households.