A weak outlook for the retail sector and a dip in consumer confidence drove the stock market lower in early afternoon trading on Wednesday. Walmart's lower outlook hurt the retail sector.
At around 1:30 p.m. ET, the Nasdaq composite was down 1.6%, while the S&P 500 lost 0.9%. The Dow Jones Industrial Average fell 0.3%. Volume rose on the Nasdaq and the NYSE compared with the same time on Monday. The small cap Russell 2000 index fell 0.4%.
Walmart cut its current-quarter and full-year profit outlook. The Dow component cited soaring food prices, which are cutting into consumer demand for apparel and other types of general merchandise.
U.S. Stock Market Today Overview |
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|---|---|---|---|---|
| Index | Symbol | Price | Gain/Loss | % Change |
| Dow Jones | (0DJIA) | 31894.33 | -95.71 | -0.30 |
| S&P 500 | (0S&P5) | 3931.33 | -35.51 | -0.90 |
| Nasdaq | (0NDQC ) | 11593.30 | -189.37 | -1.61 |
| Russell 2000 | 179.66 | -0.78 | -0.43 | |
| IBD 50 | 27.05 | +0.05 | +0.19 | |
Last Update: 1:12 PM ET 7/26/2022 |
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Walmart shares slid 7.5% in heavy volume and took down other retail stocks. The S&P Consumer Discretionary ETF was down 3.2%, making it the worst-performing S&P sector.
Target fell 4.9%, Home Depot 3.1%, Amazon.com 4.7%, Costco 3.5% and Best Buy fell 4.7%.
The Federal Reserve began its two-day meeting on interest rates Tuesday, which is widely expected to result in a 75-basis-point hike in the fed funds rate on Wednesday.
Nervousness Of Fed's Rate Hike Holds Down Stock Market
As of Tuesday morning, 75% of polled economists expected a Fed rate hike of 0.75%, compared with 25% odds of a rate hike of 1%, according to CME Group's FedWatch tool, which tracks interest rate futures.
"The take-away is that everyone does expect rates to go up — and by an amount that, prior to the past couple of months, would have been shockingly large," said Brad McMillan, chief investment officer for Commonwealth Financial Network, in a commentary Tuesday. A 0.75% rate increase is already "fully incorporated into markets" he said. "The reaction is as likely to be positive as negative, as markets conclude that the Fed getting preemptive about inflation is a good thing, in the long run."
The 10-year U.S. Treasury yield continued to slide Tuesday, falling 4 basis points to 2.76% while the price of crude oil fell to $95.65 a barrel.
A bevy of economic data released Tuesday morning all pointed to a weakening economy.
The Conference Board's Consumer Confidence Index dropped to 95.7 in July from 98.4 in June. Economists surveyed by Econoday expected 96.8.
"The decline in consumer confidence tells us that the economy is on unsure footing," said Jeffrey Roach, Chief Economist for LPL Financial.
The S&P CoreLogic Case-Shiller home price index rose 1.3% in May vs. the prior month, but it missed economist forecasts for a 1.6% increase. That gain decelerated from a revised 1.7% rise in April. Housing prices remain strong but the lower-than-expected figure indicates that rising mortgage rates and high home prices are pushing some homebuyers out of the market.
Retailers Plunge, But Coke Climbs On Earnings
Shopify stock plunged after the e-commerce firm said it will cut roughly 1,000 workers, or 10% of its global workforce, as its chief executive took responsibility for a faulty growth strategy. Including Tuesday's 16% loss, SHOP stock has tanked over 80% this year. The beleaguered e-commerce firm reports second-quarter earnings early Wednesday.
Dow Jones stock Coca-Cola rallied 1.9% after reporting better-than-expected results. The beverage giant's shares were forming a flat base with a buy point of 67.30.
General Motors fell 3% after second-quarter earnings missed while sales topped.
United Parcel Service beat second-quarter earnings expectations before the market open. The shipping company also raised its stock buybacks in 2022 to $3 billion. UPS stock fell 4.3% but bounced off its 50-day moving average.
Raytheon Technologies fell more than 3% on a mixed second-quarter report. The maker of missiles and other military hardware beat profit expectations. But a drop in missile and defense sales caused it to miss sales estimates. The company, though, backed its full year outlook. Raytheon is forming a consolidation that can be interpreted as a double bottom with a 100.78 buy point.
Cadence, GE Among Stock Market Movers
Cadence Design Systems late Monday beat Q2 expectations and raised guidance for the current quarter and full year. The maker of electronic systems design software climbed 1.7% in active trading as it forms a cuplike chart pattern with a 192.80 buy point.
Read more about Cadence Design in IBD Long-Term Leaders.
General Electric climbed more than 6% and was trading above its 50-day moving average for the first time since February after the industrial conglomerate reported a surprising rise in second-quarter profit and its cash burn situation improved.
The Innovator IBD 50 ETF climbed 0.2%, with Cadence Design its best performing stock.
Highly awaited earnings results from tech giants Alphabet and Microsoft are due out after the close.
Follow Michael Molinski on Twitter @IMmolinski
