Wall Street tumbles as Walmart warning rocks retail sector

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., July 21, 2022. REUTERS/Brendan McDermid

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  • Walmart slashes profit forecast and drags retailers in
  • McDonald’s up in sales and profit
  • GE jumps on higher profits, Coca-Cola up on forecast
  • Indices down: Dow 0.56%, S&P 1.17%, Nasdaq 1.83%

July 26 (Reuters) – U.S. stock indexes fell on Tuesday after Walmart’s profit warning heightened fears in the retail sector that consumers will cut discretionary spending in the face of decades-high inflation .

Shares of Walmart Inc. (WMT.N) fell 7.7%, while those of Target Corp (TGT.N) and Amazon.com Inc. (AMZN.O) fell more than 4% each, with the online retail giant weighing the most on the Nasdaq index (.IXIC). Read more

In a sign of growing pressure to shore up profits amid higher costs, Amazon said it would raise Prime delivery and streaming service fees in Europe by up to 43% a year. Read more

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The S&P 500 Consumer Discretionary Index (.SPLRCD) slid 3.2%, leading to sectoral declines. The S&P 500 retail index (.SPXRT) fell 3.9%.

“Walmart’s problems are widely expected to be symptomatic of the entire retail space,” said Chuck Lieberman, chief investment officer at Advisor Capital Management.

“There’s no question that inflation is higher than people are comfortable with, and that’s likely to remain the case for some time.”

Along with high inflation, a stronger dollar is also expected to weigh on earnings for companies with sprawling global operations.

Wall Street’s major indexes rallied from mid-June lows as falling commodity prices and pessimistic economic data prompted investors to scale back expectations of aggressive rate hikes by the Federal Reserve. , but fears of a recession have recently undermined momentum.

The Fed is widely expected to hike interest rates by 75 basis points at the end of its two-day policy meeting on Wednesday, which would be followed by comments from Chairman Jerome Powell.

U.S. consumer confidence fell to nearly a year-and-a-half low in July, the data showed, pointing to slowing economic growth at the start of the third quarter. Read more

Advanced second-quarter GDP data released Thursday is expected to be negative after the US economy contracted in the first three months of the year.

The International Monetary Fund, meanwhile, slashed its global growth forecast again, warning of risks from high inflation and the war in Ukraine. Read more

As of 12:19 p.m. ET, the Dow Jones Industrial Average (.DJI) was down 178.18 points, or 0.56%, at 31,811.86, the S&P 500 (.SPX) was down 46.24 points, or 1.17%, at 3,920.60 and the Nasdaq Composite (.IXIC) was down 215.17 points, or 1.83%, at 11,567.50.

Among the components of Dow, Coca-Cola Co (KO.N) gained 1.6% after the company raised its full-year revenue forecast, while McDonald’s Corp (MCD.N) rose 2.6% after beating quarterly expectations. Read more

3M Co (MMM.N) rose 6.4% after the industrial giant announced plans to spin off its healthcare business. Read more

General electric company (GE.N) gained 6.6% after the US industrial conglomerate beat revenue and profit estimates, while General Motors Co (GM.N) fell 3.3% after announcing a 40% drop in quarterly net profit. Read more

Apple Inc. (AAPL.O)Netflix Inc. (NFLX.O)Tesla Inc. (TSLA.O) fell about 1.5% each, while Alphabet Inc (GOOGL.O) and Microsoft Corp. (MSFT.O) were down around 2.5% and 3.2%, respectively, before their quarterly reports after market close.

According to data from Refinitiv, earnings for S&P 500 companies are expected to have risen 6.2% in the second quarter from the year-ago period.

Falling issues outnumbered advances by a 1.94-to-1 ratio on the NYSE and by a 1.82-to-1 ratio on the Nasdaq.

The S&P index recorded a new 52-week high and 30 new lows, while the Nasdaq recorded 28 new highs and 103 new lows.

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Reporting by Shreyashi Sanyal and Aniruddha Ghosh in Bengaluru; Editing by Arun Koyyur and Anil D’Silva

Our standards: The Thomson Reuters Trust Principles.

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