Market Wrap: Stocks Drop, Walmart Slips on Weak Forecast
NEW YORK -- U.S. stocks fell Wednesday as Walmart skidded after issuing a weak profit forecast, dragging down other big retailers, and as JPMorgan (JPM) slipped after disappointing results.
The news added to worries about the outlook for U.S. earnings, with S&P 500 profits forecast to have dropped more than 4 percent in the third quarter compared with a year ago, according to Thomson Reuters data.
Following the market close, shares of Netflix (NFLX) sank 8.7 percent to $100.61 after the company reported U.S. subscriber additions below its own forecast.
Separately, CNBC said supermarket operator Albertsons' initial public offering was likely to price at $20 or less as bidders are concerned about the Walmart forecast, while First Data's IPO is likely to price at $16. Earlier this month, Albertsons said it expected its IPO to price between $23 and $26 a share, and First Data estimated its would price between $18 and $20 a share.
During the regular session, Walmart (WMT) sank 10 percent to $60.03 in its biggest one-day percentage decline in years and heaviest trading day since January 2009, after it forecast a drop of up to 12 percent in earnings per share in fiscal 2017. The day's decline erased more than $20 billion off the retailer's market value, and the stock was among the biggest drag on both the Dow and S&P 500.
Also weighing on retailers, data showed retail sales in the United States barely rose in September.
Rival big-box retailer Target (TGT) was down 3.5 percent at $76.20, and Sears (SHLD) fell 3 percent to $24.41. The S&P 500 retail index dropped 1.2 percent.
JPMorgan (JPM) shares fell 2.5 percent to $59.99 after the bank reported disappointing third-quarter results late Tuesday.
"In these next three weeks in the earnings season, we're going to get some clear guidance not just on earnings for the third quarter but guidance for the fourth quarter and for next year. That's going to be crucial," said John Canally, investment strategist and economist for LPL Financial in Boston.
The Dow Jones industrial average (^DJI) fell 157.14 points, or 0.9 percent, to 16,924.75, the Standard & Poor's 500 index (^GSPC) lost 9.45 points, or 0.5 percent, to 1,994.24 and the Nasdaq composite (^IXIC) dropped 13.76 points, or 0.3 percent, to 4,782.85.
Wells Fargo (WFC) fell 0.7 percent to $51.50, while Bank of America (BAC) rose 0.8 percent to $15.64 also following their results.
Among other big decliners, shares of Boeing (BA) dropped 4.3 percent to $134.22.
Shares of Delta Air Lines (DAL) rose 1.8 percent to $48.59 after it said it will put the brakes on its expansion of flight capacity in 2016, in a move to fill up more planes and sell more seats at higher fares.
Declining issues outnumbered advancing ones on the NYSE by 1,809 to 1,241, for a 1.46-to-1 ratio on the downside; on the Nasdaq, 1,759 issues fell and 1,005 advanced for a 1.75-to-1 ratio favoring decliners.
The S&P 500 posted 7 new 52-week highs and 5 new lows; the Nasdaq recorded 21 new highs and 57 new lows.
What to watch Thursday:
- At 8:30 a.m. Eastern time, the Commerce Department releases the Consumer Price Index for September; the Labor Department reports weekly jobless claims; and the Federal Reserve Bank of New York releases its survey of manufacturing conditions in New York state for October.
- Freddie Mac releases weekly mortgage rates, 10 a.m.
- The Treasury Department releases its budget report for September at 11 a.m.
These selected companies are scheduled to report quarterly financial results.