Key Takeaways:
Walmart shares plunged 5% to $107.60 on Wednesday, their lowest level in nearly eight months, after Cleveland Research flagged decelerating sales trends at the retail giant.
"Walmart's core customer is showing signs of strain, with transaction growth slowing more than we expected in recent weeks," the Cleveland Research analyst wrote in a note to clients.
The selloff erased about $45 billion in market value, dragging Walmart's market capitalization to $856.3 billion. The drop came as the broader market struggled, with the S&P 500 slipping 0.2% and the Nasdaq Composite falling 0.7%, weighed down by a 6% rout in semiconductor stocks. The Dow Jones Industrial Average hovered near the flatline after touching a fresh record high earlier in the session.
Walmart's decline points to potential headwinds for consumer spending, a key pillar of the US economy, as the June jobs report looms Thursday. Economists expect the economy added 115,000 jobs last month, down from May's 172,000, with any downside surprise likely to amplify concerns about the health of the American consumer.
The selloff in Walmart weighed on the broader retail sector, with the SPDR S&P Retail ETF falling 1.8%. The move comes as investors parse mixed signals on consumer health: ADP data Wednesday showed private sector hiring slowed to 98,000 in June, below the 120,000 consensus estimate, while the ISM manufacturing gauge eased to 53.3 from 54, undershooting the 53.9 forecast.
Treasury yields rose after Federal Reserve Chairman Kevin Warsh reaffirmed his commitment to price stability at the ECB forum in Portugal, with the 10-year yield climbing 5 basis points to 4.47%. Traders pared bets on a July rate cut, with CME FedWatch data showing 31% odds of a rate hike next month.
Oil prices extended their quarterly decline, with WTI crude falling below $69 a barrel and Brent crude slipping under $73, as peace talks between the US and Iran in Qatar hit diplomatic snags. Lower energy costs have provided some relief for consumers, with the national average for a gallon of gas falling to $3.84, down 52 cents from a month ago.
The broader market's weakness was concentrated in technology, with the Philadelphia Semiconductor Index tumbling more than 6% as investors rotated out of chip stocks that had powered this year's rally. The VanEck Semiconductor ETF lost 5.4%, with Micron Technology and Sandisk each dropping more than 10%.
This article is for informational purposes only and does not constitute investment advice.
