Walmart’s plunge drags down retailers
The biggest drop in Walmart’s stock in 30 years and losses in other sectors pulled U.S. indexes lower Tuesday, snapping a sixday winning streak.
The losses deepened in the last hour of trading into a broad selloff that erased early gains led by technology companies.
Walmart plunged 10 percent after reporting weak online sales and disappointing earnings. Grocery store operators, retailers, health care companies and industrial stocks accounted for much of the market’s slide.
“Investors have been lulled into a false sense that stock markets are not volatile,” said Doug Cote, chief market strategist for Voya Investment Management. “Last week was one of the best weeks in years, and as we go back to normal volatility, you’re going to see what you would expect: normal ups and downs.”
The Standard & Poor’s 500 index fell 15.96 points, or 0.6 percent, to 2,716.26. The Dow Jones industrial average slid 254.63 points, or 1 percent, to 24,964.75. The Nasdaq lost 5.16 points, or 0.1 percent, to 7,234.31. The Russell 2000 index of smaller-company stocks gave up 13.56 points, or 0.9 percent, to 1,529.99.
The S&P 500, a benchmark for many index funds, capped its strongest week in five years on Friday, recovering more than half of the losses it suffered in a plunge at the beginning of this month. Stocks began giving back some of those gains early Tuesday as trading reopened after a long holiday weekend.
The yield on the 10-year Treasury, which is used as a benchmark for mortgages and other loans, has been rising in recent months from a low of 2.04 percent in September. Higher bond yields indicate investors expect more risk of inflation, and they also can threaten stock prices by making bonds more appealing versus stocks.
Bond prices, which had been declining early Tuesday, ended up little changed. The yield on the 10-year Treasury held at 2.88.
Walmart posted the biggest loss in the Dow and S&P 500. The tumble represents the stock’s worst single-day drop since January 1988. Investors were disappointed with the retail giant’s fourth-quarter results, which missed Wall Street’s expectations as the company wrestled with slower e-commerce sales during the busiest time of the year.
The stock shed $10.67, or 10.2 percent, to $94.11.
Several big retailers also fell, including Target, which slid $2.22, or 3 percent, to $72.86. Ross Stores dropped $2.19, or 2.7 percent, to $77.98.
Gap declined 5 percent after the clothing chain said the head of the Gap brand will leave the company. Jeff Kirwan, who has been with the company since 2004, had led the namesake brand since the end of 2014. The Gap said Kirwan had failed to achieve “the operational excellence and accelerated profit growth” that the company expected. The stock lost $1.66 to $31.61.