Stocks tumble as Walmart sales growth forecast disappoints
Category: News & Politics
Via: perrie-halpern • 21 hours ago • 1 commentsBy: Rob Wile and Brian Cheung
S E E D E D C O N T E N T
By Rob Wile and Brian Cheung
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 JPMorgan Chase and Goldman Sachs also closing down about 4%.
Prior to the market open, Walmart reported fourth-quarter earnings of 66 cents per share.
While that exceeded Wall Street estimates, it was the company's 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 "strong" but the guidance as "softer than expected."
Walmart isn't entirely down on the overall economy. The company's C-suite executives told analysts on the call that the U.S. consumer looks "resilient."
But CFO John David Rainey mentioned that "there are still uncertainties related to consumer behavior and global economic and geopolitical conditions."
Rainey also told CNBC in an interview Thursday that the company is "not going to be completely immune" from any possible tariffs on Mexico and Canada, adding that the retailer will "work with suppliers. We'll lean into our private brand. We'll shift supply where necessary to try to take advantage of lower costs that we can then pass on to consumers."
Walmart serves as a bellwether for the U.S. economy — not only because of the roughly 270 million customers the company serves each week, but because of the fact that it is the 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.
"If Walmart is giving bad guidance, you should be paying attention to it," Tom Fitzpatrick, managing director at R.J. O'Brien and Associates, told CNBC.
"Perhaps this is suggesting that the general consumer is tapped out."
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