Markets sink after a cautious outlook from Walmart

Dow tumbled 520, decliners over advancers 2-1 & NAZ lost 155.  The MLP index was off 2+ to the 323s & the REIT index remained near yesterday's close at 409.  Junk bond funds inched higher & Treasuries had limited buying which took yields lower (more below).  Oil crawled higher in the 72s & gold rose another 17 to 2953.

Dow Jones Industrials

Walmart (WMT), a Dow stock & Dividend Aristocrat, shares fell, as the big-box retailer said profit growth will slow this fiscal year even as sales continue to climb.  Holiday-qtr revenue rose 4% & e-commerce sales shot up 20% in the US, as growth in store pickup & home deliveries & gains with upper-income shoppers boosted results.  In the fiscal year ahead, the discounter said it expects net sales to grow 3-4% & adjusted operating income to increase 3.5-5.5% on a constant currency basis.  The company said that includes a 150 basis point (1.5 percentage point) headwind from acquiring smart TV company Vizio & following a leap year in 2024.  For the just completed fiscal year, WMT posted adjusted operating income growth of 9.7% on a constant currency basis.  The company expects full-year adjusted EPS of $2.50 - $2.60, which includes a 5¢ headwind from currency.  That fell short of the $2.76 expected.  CFO John David Rainey described consumer spending patterns as “steady” & said “there’s not any sharp changes that we’ve seen.”  Yet he acknowledged “there’s far from certainty in the geopolitical landscape.”  About 2/3 of sales is made, grown or assembled in the US.  Yet if tariffs on imports from Mexico & Canada take effect, he said WMT is “not going to be completely immune.”  “We’ve lived in a tariff environment for the last seven or eight years, and we’ll do what we know how to do,” he added.  “We’ll work with suppliers. We’ll lean into our private brand. We’ll shift supply where necessary to try to take advantage of lower costs that we can then pass on to consumers.”  In the 3-month period ended Jan 31, EPS fell to 65¢, compared with 68¢ in the year-ago period.  Revenue rose from $173B in the year-ago qtr.  Adjusted EPS figure excluded 1-time items, including opioid-related legal costs & gains & losses on equity & other investments.  Comparable sales, same-store sales, increased 4.6% for its US business & 6.8% for Sam's Club, excluding fuel.  WMT also hiked its div 13% to 94¢ per share, the largest increase in more than a decade.  The stock dropped 7.01 (7%).

Walmart shares drop as retailer says profit growth will slow

Treasury yields were slightly lower as investors parsed further economic data & digested Pres Trump’s latest tariff plans.  The 10-year Treasury yield slipped more than 2 basis points to 4.509%, while the 2-year Treasury yield pulled back about 1 basis point to 4.261%.  1 basis point is equal to 0.01% & yields move inversely to prices.  Meanwhile, investors are mulling over Trump's most recent tariff suggestions, which include implementing a 25% duty on automobiles, pharmaceuticals & semiconductors.  Trump said the tariffs could “go very substantially higher over a course of a year,” & could start as early as Apr 2.

Treasury yields fall slightly as investors weigh further economic data

The number of Americans filing new applications for unemployment benefits increased moderately last week, suggesting that the labor market remained on solid ground in Feb.  There were no signs yet in the report from the Labor Dept of the mass layoffs of federal gov workers & deep spending cuts being pursued by Pres Trump's administration.  Economists, who expect a spillover to the private sector, said it was too early for the negative effects to be felt in the broader economy.  Thousands of federal gov workers from scientists to park rangers, mostly those on probation, have been laid off in recent days by Elon Musk's Dept of Gov Efficiency (DOGE) an entity created by Trump.  Initial claims for state unemployment benefits rose 5K to a seasonally adjusted 219K for last week, the Labor Dept said.  The forecast called for 215K claims for the latest week.  Claims have been bouncing in the 203K-223K range so far this year.  Historically low layoffs are keeping the labor market stable, but that could change as workers dependent on federal gov contracts or funding lose their jobs.  The White House wants to slash the roughly 2.3M federal gov workforce, which excludes the military & post office, that Trump says is too bloated.  Federal gov layoffs, hiring freezes & spending cuts are expected to have ripple effects on local economies, especially in DC & the adjacent states of Virginia & Maryland, & trigger private sector job cuts.

US weekly jobless claims rise more than expected

Stocks pulled back as investors scrutinized WMT earnings & trod carefully amid the fallout from Pres Trump's planned tariffs & policy shifts.  Worries grew about coming headwinds for corp America after WMT put out a downbeat 2025 outlook while the retail giant's profit & revenue met high expectations.  Gold hit a fresh record high as investors lost an appetite for risk.  Meanwhile, the Federal Reserve's caution in light of White House policy dragged on the mood, as investors lost faith in the prospects for interest rate cuts.