U.S. Stocks Remain Mostly Lower Following Walmart Warning

Stocks came under pressure early in the session on Tuesday and continue to see notable weakness in afternoon trading. The major averages have all moved to the downside on the day following the mixed performance seen in the previous session.

Currently, the major averages are off their lows of the session but still in negative territory. The Dow is down 118.17 points or 0.4 percent at 31,871.87, the Nasdaq is down 202.68 points or 1.7 percent at 11,579.98 and the S&P 500 is down 39.90 points or 1 percent at 3,926.94.

A steep drop by shares of Walmart (WMT) is weighing on the markets, with the retail giant plunging by 7.9 percent to its lowest intraday level in almost a month.

Walmart is under pressure after lowering its guidance for the second quarter and full year primarily due to pricing actions aimed to improve inventory levels.

Auto giant General Motors (GM) has also moved to the downside after reporting second quarter earnings that missed analyst estimates.

Meanwhile, a strong gain by 3M (MMM) is limiting the downside for the Dow, with the conglomerate jumping by 6.2 percent after reporting better than expected second quarter results and announcing plans to spin off its health care business.

Shares of General Electric (GE) have also surged after the conglomerate reported second quarter results that exceeded expectations on both the top and bottom lines.

The weakness on Wall Street also comes as traders look ahead to the Federal Reserve’s monetary policy announcement on Wednesday.

The Fed is widely expected to announce another 75 basis point rate hike as part of its efforts to combat elevated inflation.

In U.S. economic news, the Commerce Department released a report showing new home sales pullback by more than expected in the month of June.

The report said new home sales plunged by 8.1 percent to an annual rate of 590,000 in June after jumping by 6.3 percent to a revised rate of 642,000 in May.

Economists had expected new home sales to tumble by 5.2 percent to an annual rate of 660,000 from the 696,000 originally reported for the previous month.

With the bigger than expected decrease, new home sales slumped to their lowest annual rate since hitting 582,000 in April 2020.

A separate report released by the Conference Board showed consumer confidence in the U.S. deteriorated by more than expected in the month of July.

The Conference Board said its consumer confidence index slid to 95.7 in July from a downwardly revised 98.4 in June. Economists had expected the index to drop to 96.8 from the 98.7 originally reported for the previous month.

Sector News

Retail stocks continue to see substantial weakness following the warning from Walmart, dragging the Dow Jones U.S. Retail Index down by 3.9 percent.

The index continues to give back ground after ending last Thursday’s trading at its best closing level in well over two months.

Significant weakness also remains visible among airline stocks, as reflected by the 1.8 percent slump by the NYSE Arca Airline Index.

Brokerage stocks have also shown a notable move to the downside on the day, resulting in a 1.6 percent drop by the NYSE Arca Broker/Dealer Index.

Banking, semiconductor and oil stocks are also seeing considerable weakness, while gold stocks are bucking the downtrend despite a decrease by the price of the precious metal.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan’s Nikkei 225 Index edged down by 0.2 percent, while China’s Shanghai Composite Index advanced by 0.8 percent.

Meanwhile, European stocks moved mostly lower on the day. While the U.K.’s FTSE 100 Index closed nearly unchanged, the French CAC 40 Index fell by 0.4 percent and the German DAX Index slumped by 0.9 percent.

In the bond market, treasuries have pulled back off their best levels of the day but remain positive. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.9 basis points to 2.781 percent.

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