Wall Street Retreats as Walmart Stock Plunges, S&P 500 Pulls Back/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ Wall Street pulled back from record highs Thursday, with the S&P 500 down 0.6% as Walmart’s 6.2% stock drop weighed on markets. Retail and tech sectors declined, while bond yields eased amid mixed economic data. The Federal Reserve is expected to hold interest rates steady amid inflation concerns.
Stock Market Pullback Quick Looks:
- S&P 500 slips 0.6% after consecutive record highs; Dow falls 439 points.
- Walmart drops 6.2% despite strong quarterly profits, citing cautious profit outlook.
- Retail stocks fall: Costco (-2.1%), Target (-1.2%), Amazon (-1.3%).
- Palantir Technologies tumbles 10% after potential $50B defense budget cut.
- Shake Shack surges 11.8%, Alibaba climbs 10.7% on stronger-than-expected earnings.
- Treasury yields ease with the 10-year yield falling to 4.50%.
- Jobless claims rise, hinting at potential softening in the labor market.
- Fed likely to keep interest rates steady amid inflation and economic uncertainty.
- European markets mixed; Asian markets decline as China holds rates steady.
- Manufacturing growth slows in the mid-Atlantic region.
Wall Street Retreats as Walmart Stock Plunges, S&P 500 Pulls Back
Deep Look:
Wall Street retreated from its record-setting streak Thursday, weighed down by declines in major retail and tech stocks. The S&P 500 fell 0.6% after hitting consecutive all-time highs earlier in the week. The Dow Jones Industrial Average dropped 439 points, or 1%, while the Nasdaq Composite declined by 0.7%.
Walmart led the market downturn, plunging 6.2% despite posting stronger-than-expected quarterly profits. Investors reacted negatively to the retail giant’s cautious profit outlook, which cited ongoing inflation pressures and potential tariffs under President Donald Trump’s administration. The warning sent ripples through the retail sector: Costco shares slid 2.1%, Target dropped 1.2%, and Amazon fell 1.3%.
Tech stocks also took a hit, with Palantir Technologies tumbling another 10%, extending its two-day loss to over 20%. The drop came after U.S. Defense Secretary Pete Hegseth announced plans to cut $50 billion in defense spending for next year—significant news for Palantir, which derives 55% of its $2.9 billion revenue from government contracts.
Not all earnings news was negative. Medical products company Baxter International jumped 8.5% after surpassing analysts’ profit expectations, citing strong sales in pharmaceuticals and therapies. Meanwhile, Shake Shack soared 11.8% on better-than-expected quarterly results, with CEO Rob Lynch noting solid sales trends despite challenges from bad weather and wildfires in Los Angeles. Alibaba’s U.S.-traded shares also surged 10.7% after the Chinese e-commerce giant beat profit forecasts.
On the economic front, Treasury yields pulled back as fresh data revealed a slight increase in unemployment claims last week, signaling potential softening in the job market. The yield on the 10-year Treasury fell to 4.50% from 4.54%, while the two-year yield edged down to 4.25%. Rising jobless claims, along with slower-than-expected manufacturing growth in the mid-Atlantic region, underscore ongoing economic uncertainties.
The Federal Reserve’s stance remains cautious. After refraining from cutting interest rates at its latest policy meeting, Fed officials continue to monitor inflation and economic indicators. Although the Fed had previously projected up to four rate cuts in 2025, expectations have cooled to just two as inflation remains stubbornly above the 2% target. January’s consumer price index rose 3% year-over-year, reflecting continued pressure on prices.
Adding to market uncertainty are Trump’s proposed tariffs and immigration policies, which Fed officials noted could further fuel inflation. While lower interest rates typically stimulate the economy and support asset prices, the Fed is wary of stoking inflation amid strong consumer spending trends.
International markets offered mixed signals. European indexes fluctuated, reflecting global uncertainty, while Asian markets largely declined. Hong Kong’s Hang Seng Index fell 1.6% after China opted to keep its benchmark interest rate unchanged, citing efforts to preserve financial stability. Shanghai’s composite index edged down by less than 0.1%.
Investors remain focused on corporate earnings, economic data, and Federal Reserve policy cues as markets navigate inflation concerns and potential geopolitical headwinds. With earnings season in full swing, volatility is likely to persist in the weeks ahead.
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