(Reuters) – The New York Stock Exchange opened lower on Tuesday as Walmart’s profit warning hurt the retail sector and raised fears that consumers will cut spending amid high inflation.
In early trading, the Dow Jones index lost 86.73 points, or 0.27%, to 31,903.31 points and the broader Standard & Poor’s 500 fell 0.45% to 3,949.17 points.
The Nasdaq Composite lost 0.68%, or 80.122 points, to 11,702.544.
Walmart on Monday lowered its annual and quarterly profit targets as soaring food and fuel prices dampened customer spending, and fell 8.30% at the opening.
In its wake, Amazon lost 3.81%, Nike 1.92%, Best Buy 3.94%, Costco 2.35%. Target and Home Depot yield 4.9% and 2.69% respectively.
Piper Sandler analysts said in a note to expect downward revisions to the outlook across the retail sector, with brands focused on low- and middle-income consumers the most fragile.
Walmart’s outlook provided “a diagnostic look at the average American household”, and shows consumers are digesting rising food and staple prices by cutting back on spending in categories such as clothing, say Jefferies analysts.
Among other stocks, 3M gained 7.19% after announcing plans to spin off its healthcare business in which it would retain a 19.9% stake.
The giant of the agricultural industry ARCHER DANIELS MIDLAND (ADM) takes 5.13% in favor of a 74% increase in its profit in the second quarter, thanks to a strong demand for cereals.
This week is the busiest for corporate earnings, with releases expected from around 170 S&P 500 companies. Microsoft, Google-owner Alphabet, and Visa are expected after the close on Wall Street. Apple and Amazon.com are scheduled for Thursday.
Caution has also dominated the markets since the start of the week, pending monetary policy decisions from the Federal Reserve, which is expected to raise its rates against inflation again on Wednesday.
Comments from Fed Chairman Jerome Powell after the announcement will be key, with some investors worried that aggressive rate hikes could tip the U.S. economy into recession.
(Written by Kate Entringer in Gdansk)
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