Indexes end sharply lower as Walmart profit warning spooks investors

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, US, July 21, 2022. REUTERS/Brendan McDermid

NEW YORK, July 26 (Reuters) – US stocks ended sharply lower Tuesday as a profit warning by Walmart dragged down retail shares and exceptionally weak consumer confidence data also fueled fears about spending.

Walmart (WMT.N) shares sank after the retailer cut its full-year profit forecast late on Monday. Walmart blamed surging prices for food and fuel, and said it needed to cut prices to pare inventories. read more

Shares of Target Corp (TGT.N) and Amazon.com Inc (AMZN.O) also dropped. read more

Data showed US consumer confidence dropped to nearly a 1-1/2-year low in July amid persistent worries about higher inflation and rising interest rates. read more

“Walmart basically pulled the plug, and most retailers are lower across the board,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

With this week’s coming Federal Reserve decision mostly discounted by the market, the focus is on earnings and data, he said.

The Fed started a two-day meeting and on Wednesday, it is expected to announce a 0.75 percentage point interest rate hike to fight inflation. read more Investors have worried that aggressive interest rate hikes by the Fed could tip the economy into recession.

Amazon, which said it would raise fees for delivery and streaming service Prime in Europe by up to 43% a year, was among the biggest drags on the Nasdaq and S&P 500, while consumer discretionary (.SPLRCD) led declines among S&P 500 sectors. read more

According to preliminary data, the S&P 500 (.SPX) lost 46.31 points, or 1.17%, to end at 3,920.53 points, while the Nasdaq Composite (.IXIC) lost 220.09 points, or 1.88%, to 11,562.58. The Dow Jones Industrial Average (.DJI) fell 235.98 points, or 0.74%, to 31,754.06.

Meanwhile, Coca-Cola Co (KO.N) gained after the company raised its full-year revenue forecast. McDonald’s Corp (MCD.N) rose after beating quarterly expectations. read more

A busy week for earnings also includes reports from Alphabet Inc (GOOGL.O) and Microsoft Corp (MSFT.O) after the bell.

Investors have been looking to see if this week’s earnings news from mega-cap companies might help the stock market sustain its recent rally. read more

Earnings from S&P 500 companies are expected to have risen 6.2% for the second quarter from the year-ago period, according to Refinitiv data.

In other company news, 3M Co (MMM.N) rose after the industrial giant said it planned to spin off its healthcare business. read more General Electric Co (GE.N) gained after the industrial conglomerate beat revenue and profit estimates.

The International Monetary Fund cuts global growth forecasts again. read more

Additional reporting by Shreyashi Sanyal and Aniruddha Ghosh in Bengaluru; Editing by Arun Koyyur, Anil D’Silva and David Gregorio

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