How Wal-Mart Crushed the Dow

Before you go, we thought you'd like these...
Before you go close icon

Stocks were sailing along smoothly until about 2 p.m. EST, when an internal memo at Wal-Mart sent stocks reeling. An email obtained by Bloomberg News quotes Wal-Mart's vice president of finance and logistics as saying, "In case you haven't seen a sales report these days, February MTD sales are a total disaster." That's not exactly a ringing endorsement of consumer spending or Wal-Mart, although the company did say the statements may not be entirely accurate.

The first concern is that consumers have cut back after seeing smaller paychecks in January, affecting spending in late January and now in February. But it does contrast with the University of Michigan-Thomson Reuters consumer sentiment gauge, which rose to 76.3 in February from 73.8 in January. That's the highest reading since November, before taxes went up.

The Wal-Mart leak sent its stock down 2.9% for the day and dragged the Dow Jones Industrial Average and S&P 500 down 0.25% and 0.33%, respectively. Both indexes had previously been flat for the day.


Friday was also a bad day for commodities. Gold is down 1.9% after the G-20 said it wouldn't punish Japan for making moves to devalue the yen. The group did say it will avoid competitive devaluations from other countries, which put downward pressure on gold because it's seen as a hedge against devaluation.

Oil has suffered a similar fate, falling 1.5% to less than $96 per barrel. This has done little to help oil producers: ExxonMobil and Chevron are down 0.7% and 1.1%, respectively. I wouldn't worry too much about the drop in oil, because it's partly a negative reaction to the rise of oil prices in recent months, which may have been overdone.

Is it time to dump Wal-Mart?
To learn about two retailers with especially good prospects, we invite you to take a look at The Motley Fool's special free report: "The Death of Wal-Mart: The Real Cash Kings Changing the Face of Retail." In it, you'll see how these two cash kings are able to consistently outperform and how they're planning to ride the waves of retail's changing tide. You can access it by clicking here.

The article How Wal-Mart Crushed the Dow originally appeared on Fool.com.

Fool contributor Travis Hoium has no position in any stocks mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDrawThe Motley Fool recommends Chevron. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners