Wal-Mart Warning Hits U.S. Stocks
October 14 2015 - 05:30PM
Dow Jones News
By Leslie Josephs
U.S. stocks stumbled Wednesday after a gloomy earnings forecast
from Wal-Mart Stores Inc. weighed on shares of consumer-focused
companies.
The Dow Jones Industrial Average dropped 157.14 points, or 0.9%
to 16924.75. The S&P 500 lost 9.45 points, or 0.5% to 1994.24.
The Nasdaq Composite fell 13.76, or 0.3%, to 4782.85.
Wal-Mart shares tumbled 10.04%, or $6.70 to 60.03, - the lowest
closing price since May 2012 - after the retailer predicted a sharp
drop in earnings next year. Wal-Mart's tumble shaved almost 45
points off the Dow and was the company's biggest one-day percentage
loss since January 1988.
The outlook fuelled more selling in consumer stocks. Investors
had already been grappling with weaker-than-expected U.S. retail
sales growth of 0.1% in September.
The S&P consumer staples index fell 1.1% while its consumer
discretionary index dropped 1%.
"The strength of the consumer in the U.S....is being
questioned," said Kate Warne, investment strategist at Edward
Jones.
The yield on the 10-year Treasury note dropped below 2% for the
first time in two weeks as demand for haven assets rose. Yields
fall as prices rise. Gold futures rose for a fourth session, adding
1.2% to end at $1,180.10 an ounce.
Other retailers were not immune to the selloff. Target fell
1.69, or 3.3% to 49.11. Dollar General fell 2.86, or 4.21% to
65.11. Best Buy fell 2.21, or 6% to 34.83.
"Retail investors and general consumers are uncertain and are
anxious," said Omar Aguilar, chief investment officer for equities
at Charles Schwab Investment Management.
The U.S. economy continued to expand at a modest pace at the end
of the third quarter, though activity slowed or declined in some
pockets as the stronger dollar weighed on some employers, the
Federal Reserve said Wednesday European shares followed Asian
markets lower after data showed lower-than-expected Chinese
inflation in September, a day after disappointing import and export
data from China dented stocks around the world. The consumer-price
index rose 1.6% in September from a year earlier, compared with a
2% rise in August.
One outlier in Wednesday's broad decline, TripAdvisor, surged
17.03, or 25.5% to 83.72 after Priceline Group Inc. agreed to list
some of its travel websites on TripAdvisor.
Investors were also grappling with mixed earnings reports.
J.P. Morgan Chase & Co. shares ended 1.56, or 2.6% lower, at
$59.99 after the bank missed analysts' third-quarter estimates.
J.P. Morgan reported after market close on Tuesday.
Bank of America Corp. shares rose 12 cents, or 0.8% to $15.64
after the bank beat analysts' expectations for third-quarter
earnings.
The Stoxx Europe 600 fell 0.9%, deepening losses from
Tuesday.
Most Asian indexes declined amid fears Beijing would miss its
year-end growth target. The Shanghai Composite Index closed 0.9%
lower, while Hong Kong's Hang Seng Index lost 0.7% and Japan's
Nikkei Stock Average fell 1.9%. China's third-quarter growth
figures are due for release on Monday.
In currencies, the euro was recently up 0.8% against the dollar
to $1.1474, while the dollar was 0.8% lower against the yen at
Yen118.85.
Brent crude oil was down 0.2% at $49.47 a barrel.
Write to Leslie Josephs at leslie.josephs@wsj.com
(END) Dow Jones Newswires
October 14, 2015 17:15 ET (21:15 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.