Stocks tumble as Walmart sales growth forecast disappoints
Stocks tumbled from all-time highs Thursday in the wake of Walmart projecting a lower-than-expected sales outlook.
The Dow Jones Industrial Average fell 450 points, or 1%. The S&P 500 declined 0.4%. The tech-heavy Nasdaq lost 0.5%.
Bank stocks also fell significantly, with Ā JPMorgan Chase andĀ Goldman Sachs also closing down about 4%.Ā
Prior to the market open, WalmartĀ reported fourth-quarter earningsĀ of 66 cents per share.
While that exceeded Wall Street estimates, it was the companyās forward guidance for the fiscal year that left investors upset. Management said net sales would grow 3-4% for the upcoming year, disappointing analysts who were hoping for a figure closer to 5%.
Bank of America Securities analysts Robert Ohmes and Kendall Toscano described the earnings as āstrongā but the guidance as āsofter than expected.ā
Walmart isnāt entirely down on the overall economy. The company’s C-suite executives told analysts on the call that the U.S. consumer looks āresilient.ā
But CFO John David Rainey mentioned that āthere are still uncertainties related to consumer behavior and global economic and geopolitical conditions.ā
Rainey also toldĀ CNBC in an interview ThursdayĀ that the company is ānot going to be completely immuneā from any possible tariffs on Mexico and Canada, adding that the retailer will āwork with suppliers. Weāll lean into our private brand. Weāll shift supply where necessary to try to take advantage of lower costs that we can then pass on to consumers.ā
Walmart serves as a bellwether for the U.S. economy ā not only because of the roughly 270 million customers the company serves each week, but because of the fact that it is theĀ largest private employer in the United States, with 1.6 million associates as of last year.
While the stock market remains near all-time highs, it has yet to surpass the peaks seen in the weeks after President Donald Trump’s election in November. Since the start of December, the Dow is down 2%, while the S&P 500 is effectively flat.
āIf Walmart is giving bad guidance, you should be paying attention to it,ā Tom Fitzpatrick, managing director at R.J. OāBrien and Associates, told CNBC.
āPerhaps this is suggesting that the general consumer is tapped out.ā
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