By Michael Wursthorn and David Hodari 

Falling shares of Walmart pulled the Dow Jones Industrial Average and the S&P 500 lower Tuesday, snapping a six-session winning streak for the indexes.

Shares of Walmart tumbled 10%, the biggest drop in 30 years, after the retailer reported slowing online sales growth, indicating the difficulty it is facing in fending off competition from Amazon.com. The retailer's struggle to grow online sales at a faster pace reverberated across the retail and consumer-staple sectors to pull down shares of several peers.

"For a company the size of Walmart to drop as much as it did, it sends a shudder through everybody in retail," said Jeffrey Lancaster, a principal with Bingham, Osborn & Scarborough, a San Francisco-based investment firm with $4.2 billion in assets under management. "It's a tough world out there for everybody competing with Amazon."

The Dow fell 254.63 points, or 1%, to 24964.75, while the S&P 500 declined 15.96 points, or 0.6%, to 2716.26 -- the first declines for the indexes since they entered correction territory on Feb. 8. The Nasdaq Composite dropped 5.16 points, or less than 0.1%, to 7234.31 to close lower for a second consecutive session.

Shares of Walmart shed $10.67, or 10%, to $94.11, its biggest daily percentage decline since January 1988. Walmart's flagging stock shaved roughly 73 points from the Dow and contributed to a 2.3% pullback among shares of consumer-staple stocks in the S&P 500.

Gap also weighed on the S&P 500, with shares down 1.66, or 5%, at 31.61 after the company said it would replace the president and chief executive of its flagship Gap brand as it looks to boost sales.

Other retailers that traded lower included Target, which fell 2.22, or 3%, to 72.86, and Macy's, off 61 cents, or 2.3%, at 25.65.

Telecommunications companies also contributed to Tuesday's drop after a federal judge ruled AT&T isn't entitled to details of the Trump administration's internal discussions on the proposed merger with Time Warner. Shares of AT&T fell 37 cents, or 1%, to 36.77, while Verizon Communications shed 1.23, or 2.5%, to 48.92.

Despite Tuesday's struggles, stocks have recovered much of the value shed earlier this month, as companies have reported mostly upbeat earnings and boosted expectations for the remainder of the year.

About three-quarters of S&P 500 companies that reported earnings through Friday exceeded profit and sales expectations, according to S&P Dow Jones Indices. And more than a fifth of the broad index has issued positive earnings guidance for 2018, according to FactSet, the highest number since the data provider began tracking guidance in 2007.

That helped the Dow recover around half of its more than 10% decline from its January peak. Still, investors are reacquainting themselves with a market force that was absent for much of last year: volatility.

"What we're seeing now is more normal market behavior," said Cooper Abbott, president and chairman of Carillon Tower Advisers, a $64 billion asset-management firm, of the increased volatility. "It's frankly healthy for markets to have this kind of adjustment."

Rising inflation in the U.S. has prompted investors to second-guess central bank guidance amid speculation that those institutions will speed up the wind-down of easy-money policies that helped fuel the stock market's climb in recent years, said Larry Hatheway, chief economist at GAM Investments.

Elsewhere, the Stoxx Europe 600 added 0.6%. Japan's Nikkei closed down 1%, giving up some of its early-week rise due to weakness in its electronics and banking sectors.

With Chinese and Taiwanese markets still closed for the Lunar New Year holiday, the Hang Seng Index closed down 0.8% in its first full day of trading, while South Korea's Kospi fell 1.1%.

Write to Michael Wursthorn at Michael.Wursthorn@wsj.com and David Hodari at David.Hodari@dowjones.com

(END) Dow Jones Newswires

February 20, 2018 17:31 ET (22:31 GMT)

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