Share

US stocks sink as Wal-Mart earnings stoke fears

New York - US stocks slumped on Thursday after weak earnings from Wal-Mart hit retail equities amid concerns that investors are shifting from stocks to bonds.

The Dow Jones Industrial Average sank 167.16 (1.01%) to 16 446.81 after earlier slipping below 16 400.

The broad-based S&P 500 plummeted 17.68 (0.94%) to 1 870.85 while the tech-rich Nasdaq Composite Index shed 31.33 (0.76%) to 4,069.29.

Analysts said disappointing earnings from Wal-Mart Stores weighed on the broader market.

The retail giant reported earnings of $1.10 per share, 5 cents below expectations. Shares of the Dow component fell 2.4%. Other retailers also fell, including Macy's (-1.3%) and Target (-1.8%).

Michael James, managing director of equity trading at Wedbush Securities, said investors are also "nervous" at the drop in treasury bond yields as demand for fixed-income investments picks up.

"When you continue to see the bond market telling you an economic slowdown is coming, it's not very inspiring," James said.

"If the economy is not growing, you are going to be exiting equity exposure and increasing fixed-income exposure."

Large banks had a bad day, including Bank of America (-2.0%), Citigroup (-1.3%) and Dow component JPMorgan Chase (-1.6%).

Prominent growth stocks also did badly, including Facebook and Netflix, both losing 2.2%.

General Motors fell 1.7% after it recalled nearly three million more vehicles. The biggest recall involves several car models that could suffer from a brake-lamp problem linked to 13 crashes.

Retailer Kohl's reported a 15% dip in earnings on falling sales. That translated into 60 cents per share, 2c shy of expectations. Shares fell 3.4%.

Cisco Systems meanwhile gained 6.0% as it gave an encouraging outlook on business conditions in the US and Europe. The information technology giant also bested expectations for earnings and revenues.

Cable and Internet service suppliers Comcast (+1.0%) and AT&T (+0.4%) gained after the Federal Communications Commission voted for a controversial proposal that would allow them to charge certain customers extra to use Internet "fast lanes."

Bond prices rose. The yield on the 10-year US Treasury fell to 2.50% from 2.54% on Wednesday, while the 30-year declined to 3.34% from 3.38%. Bond prices and yields move inversely.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.94
-0.0%
Rand - Pound
23.90
+0.0%
Rand - Euro
20.41
+0.1%
Rand - Aus dollar
12.33
+0.1%
Rand - Yen
0.13
+0.0%
Platinum
908.05
+1.2%
Palladium
1,014.94
0.0%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders