Wall Street tumbles as Walmart warning rattles retail stocks – Reuters

Unusually weak consumer confidence data also fueled spending fears

By Reuters

Published: Wed 27 Jul 2022, 07:05

U.S. stocks ended sharply lower on Tuesday as a profit warning from Walmart sent retail stocks lower. Unusually weak consumer confidence data also fueled spending fears.

Shares of Walmart fell 7.6% after the retailer cut its full-year profit forecast on Monday night. Walmart blamed soaring food and fuel prices and said it needed to cut prices to reduce inventory.

Shares of Target Corp fell 3.6% and Amazon.com Inc fell 5.2%, while the S&P 500 retail index fell 4.2%.

On Tuesday, data showed U.S. consumer confidence fell to nearly a one-to-one-and-a-half-year low in July, amid lingering concerns about rising inflation and rising interest rates.

“The majority of companies reporting today beat (on) earnings, and they did. But of course there were some warnings, and that’s what the market is focused on,” noted Peter Cardillo, chief market economist at Spartan Capital Securities. At New York.

Amazon, which said it would raise Prime delivery and streaming service fees in Europe by up to 43% a year, was the biggest drag on the Nasdaq and S&P 500, while consumer discretionary lagged. fell 3.3% and led to a decline among S&P 500 sectors.

The Federal Reserve has started a two-day meeting and is expected to announce an interest rate hike of 0.75 percentage points on Wednesday to fight inflation. Investors fear that aggressive interest rate hikes by the Fed could tip the economy into recession.

The Dow Jones Industrial Average fell 228.5 points, or 0.71%, to 31,761.54, the S&P 500 lost 45.79 points, or 1.15%, to 3,921.05 and the Nasdaq Composite fell 220.09 points, or 1.87%, to 11,562.58.

A busy week for earnings also included reports from Alphabet Inc and Microsoft Corp after the bell. Microsoft shares were down 0.5% in after-hours trading, while Alphabet rose 3%, following corporate results. Microsoft ended the regular session down 2.7%, while Alphabet ended down 2.3% on the day.

Investors were looking to see if this week’s earnings news from ultra-large-cap companies could help the stock market sustain its recent rally.

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

Additionally, in the regular session, Coca-Cola Co gained 1.6%, after the company raised its full-year revenue forecast. McDonald’s Corp rose 2.7% after beating quarterly expectations. 3M Co rose 4.9% after the industrial giant announced plans to divest its healthcare business. General Electric Co gained 4.6% after the industrial conglomerate beat revenue and profit estimates.

In other perspectives, the International Monetary Fund again cut its forecast for global growth.

Volume on U.S. exchanges was 9.60 billion shares, compared to an average of 10.93 billion for the full session over the past 20 trading days. Falling issues outnumbered rising ones on the NYSE by a ratio of 1.73 to 1; on the Nasdaq, a 1.72-to-1 ratio favored decliners.

The S&P 500 posted 1 new 52-week high and 30 new lows, while the Nasdaq Composite posted 39 new highs and 138 new lows.