Grim news from Walmart sends U.S. markets lower

Big retailers and technology companies led stocks lower on Wall Street on Tuesday after Walmart warned that inflation is hurting American consumers' spending power.

Walmart slumped 7.6% after the retail giant cut its profit outlook for the second quarter and the full year late Tuesday, saying that rising prices for food and gas are forcing shoppers to cut back on more profitable discretionary items, particularly clothing.

The retailer's profit warning in the middle of the quarter is rare and raised worries about how the highest inflation in 40 years is affecting the entire retail sector.

Stocks of other major chains also fell. Target dropped 3.6%, Macy's slid 7.2% and Kohl's fell 9.1%.

The S&P 500 fell 45.79 points to 3,921.05. The Dow lost 228.50 points to end at 31,761.54. The Nasdaq fell 220.09 points to 11,562.57.

Bond yields were mixed Tuesday. The two-year Treasury yield, which tends to move with expectations for the Fed, rose to 3.04% from 3.02% late Monday. The 10-year yield, which influences mortgage rates, fell to 2.80% from 2.82%.

Technology stocks, retailers and communication companies were among the biggest drags on the benchmark S&P 500 index. Microsoft fell 2.7%, Amazon slid 5.2% and Facebook owner Meta Platforms dropped 4.5%.

The losses easily outweighed gains by health care and utilities stocks. Small company stocks also fell. The Russell 2000 gave up 12.53 points, or 0.7%, to end at 1,805.25.

Shares of automaker General Motors fell 3.4% after the company said its second-quarter profit fell 40% from a year ago, as computer chip and parts shortages hobbled factory output and drove the company's U.S. sales down more than 15%.