NEW YORK — Walmart’s significant decline on Thursday contributed to a downturn on Wall Street, reversing the previous upward trend.
The S&P 500 experienced a 0.4% decrease, marking its first decline following record highs set for two consecutive days. The Dow Jones Industrial Average saw a steeper loss of 450 points, representing a 1% drop, while the Nasdaq composite fell by 0.5%.
The dip in Walmart’s stock, which plummeted by 6.5%, was a major factor in pulling the market lower despite the retail giant reporting quarterly profits that exceeded analyst expectations. The company, based in Bentonville, Arkansas, provided a future profit forecast that was below what analysts anticipated, attributing its cautious outlook to ongoing high inflation and the potential impact of tariffs proposed by President Trump.
Despite the challenges, Walmart is projecting revenue growth for the next year and expressed confidence in managing the implications of tariffs. However, its disappointing profit forecast led to a ripple effect throughout the retail sector, with Costco falling 2.6%, Target declining 2%, and Amazon witnessing a 1.7% drop.
In addition to Walmart, Palantir Technologies negatively impacted the market, dropping 5.2% after a prior fall of 10.1%. This decline followed U.S. Defense Secretary Pete Hegseth’s announcement regarding a proposal to reduce $50 billion in defense spending for the coming year. The software company’s revenues are heavily reliant on government contracts, making it particularly vulnerable to budget cuts.
On a brighter note, Baxter International saw its stock surge by 8.5% after reporting better-than-expected quarterly profits, attributing its success to strong performance in its pharmaceuticals and medical products divisions. Shake Shack’s shares climbed 11.1% on similar news, with CEO Rob Lynch highlighting steady sales despite adverse weather conditions and wildfires affecting customer turnout.
Alibaba, the major Chinese e-commerce player, also experienced an 8.1% rise in its U.S.-traded stock following the announcement of stronger quarterly profits, along with insights into its advancements in artificial intelligence.
Overall, the S&P 500 declined by 26.63 points to finish at 6,117.52, with the Dow Jones Industrial Average dropping 450.94 points to 44,176.65 and the Nasdaq composite falling 93.89 points to 19,962.36.
In the bond market, Treasury yields fell slightly after a report indicated an unexpected rise in unemployment benefit claims, suggesting that layoffs could be on the rise, although the overall numbers remain historically low. Another report indicated that manufacturing growth in the mid-Atlantic region is still ongoing, though not at the levels economists had forecasted.
These economic indicators might influence the Federal Reserve’s decisions regarding interest rates. Recently, the Fed chose not to lower its main interest rate for the first time in a policy meeting since starting such cuts in September. Lower interest rates can provide a boost to the economy and investment values but may also exacerbate inflation concerns. Recent discussions among Fed officials highlighted potential inflationary pressures from Trump’s proposed tariffs, increasing consumer spending, and the impact of mass immigration policies.
As a result, the 10-year Treasury yield fell to 4.50% from 4.54%, while the two-year Treasury yield remained unchanged at 4.27%, indicating expectations for future Fed actions are stabilizing.
Traders are now reducing their predictions on the number of interest rate cuts the Fed may enact this year, with some suggesting there may be none at all. Economists are particularly wary of tariffs’ effects, although many on Wall Street believe the ultimate impact may not be as severe as initially feared.
Solita Marcelli, chief investment officer for the Americas at UBS Global Wealth Management, remarked on the political ramifications of sustained inflation, indicating that the Trump administration is likely to avoid jeopardizing economic growth with extensive tariffs.
Meanwhile, internationally, stock indexes fell across Europe and Asia. In Hong Kong, the Hang Seng Index dropped 1.6%, following China’s central bank’s decision to keep its benchmark interest rate steady, aimed at maintaining financial stability. Stocks in Shanghai saw a minor decrease of less than 0.1%.
