Dow Loses Steam After Six Sessions of Gains
February 20 2018 - 2:19PM
Dow Jones News
By Michael Wursthorn and David Hodari
-- Volatility returns to stocks
-- Bond yields continue to climb
-- Consumer staples slide
Falling shares of Walmart pulled the Dow Jones Industrial
Average lower Tuesday, putting the blue-chip index on track for its
first loss in seven trading sessions.
Shares of Walmart tumbled more than 9% after the retailer
reported slowing online sales growth, indicating its difficulty in
fending off competition from Amazon.com. That drop, Walmart's
biggest slide in more than two years, took roughly 67 points off
Dow industrials and contributed to a 1.9% decline among shares of
consumer-staple stocks in the S&P 500.
"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 154 points, or 0.6%, to 25064 in recent trading,
while the S&P 500 was down 0.2% after paring a bigger decline
suffered earlier in the session. The Nasdaq Composite edged 0.5%
higher, buoyed by rising shares of technology companies.
Gap also weighed on the S&P 500, with shares down 4.5% 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 were trading lower included Target, down
2.5% and Macy's, off 1.2%.
T
hat offset gains among chip makers, several of which were
trading higher after Qualcomm raised its bid for NXP
Semiconductors, as it sought to fend off a hostile takeover
approach by Broadcom. Shares of NXP climbed more than 6%, while
Broadcom gained 1.7%. Qualcomm fell 2.4%.
Despite Tuesday's struggles, stocks were on firmer footing after
having recovered much of the value shed earlier this month, as
companies report mostly upbeat corporate earnings and boost
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 ever since the data
provider began tracking guidance data in 2007.
That helped the Dow recover roughly 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.
Meanwhile, U.S. Treasury yields continued to climb. The yield on
the benchmark 10-year U.S. Treasury note was recently up to 2.906%,
according to Tradweb, from last week's closing level of 2.877%,
which marked a four-year high. Bond yields move inversely to
prices.
Elsewhere, the Stoxx Europe 600 added 0.6%. Japan's Nikkei
closed 1% down, giving up some of its early-week rise thanks to the
weakness of 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 14:04 ET (19:04 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.