Major US stock indexes opened lower on Thursday as rising government bond yields significantly hurt investor sentiment. According to The Times of India, the Dow Jones Industrial Average dropped 430 points, or 0.8%, as of 10:15 a.m. Eastern time, while the S&P 500 fell 0.4% and was headed for its fourth decline in the five sessions since reaching a record high last week. The Nasdaq Composite was down 0.7% during the opening session. As per The Times of India, the bond market remains at the heart of the recent market turbulence, with Treasury yields climbing through the summer as investors worried about elevated inflation, enormous government debt burdens and other factors. The 10-year Treasury yield rose to 4.69% from 4.65% late Wednesday, bringing it close to the 4.71% level recorded late Tuesday, before the Treasury Department announced its planned purchases.
Retail giant Walmart experienced a dramatic 10% decline to a nine-month low of $103 after missing quarterly sales estimates for the first time in over five years. According to LiveMint, US comparable sales growth slowed to 2.6% excluding fuel, marking the slowest pace in more than six years and coming in below analysts' estimates compiled by Bloomberg. The retailer reported adjusted earnings per share of $0.81, beating the analyst consensus of $0.74 by $0.07, while revenue reached $187.94 billion, up 5.9% YoY and above the $186.75 billion estimate. However, the company's Walmart-only U.S. stores comparable sales excluding gas grew 2.6%, below the consensus estimate of 3.67%, marking the slowest U.S. sales growth in six years. The slowdown was primarily attributed to pricing pressure in Walmart's pharmacy business due to federal negotiations that resulted in lower drug prices, with the company citing the impact of a price cap on 10 top-selling pharmaceutical products that took effect on January 1. As per Moneycontrol, Walmart shares fell as much as 10%, the most intraday since 2022, in New York trading on Thursday, erasing a modest year-to-date gain through the previous day's close and becoming the largest drop among companies in the Nasdaq 100 Index.
The retail slowdown reflects broader consumer behavior shifts as rising gasoline prices prompt consumers to make trade-offs, according to LiveMint. CFO John David Rainey noted that when fuel prices increase and get above $4, perhaps there's a psychological impact to that... consumers are making trade-offs. Lower-income households have particularly pulled back their spending amid elevated gasoline prices, while consumer sentiment declined for the first time in three months in August and the labour market has shown signs of weakness. Store traffic growth slowed to 1.5% in the latest three-month period from 3% in the first quarter, reflecting the moderation in consumer spending. Excluding health and wellness, Walmart's US comparable sales rose 3.4%, its slowest pace since the first quarter of fiscal 2023, though the company continued to gain market share, including in groceries, as it lowered prices on various products. As per Moneycontrol, Chief Executive Officer John Furner said on a call with analysts that the company lowered prices of more than 11,000 items in the quarter, about double the typical amount, with the gap between Walmart's grocery prices and those of other supermarkets widening as the retailer continues to invest in price competitiveness.
Despite the challenging quarter, Walmart raised its full-year guidance for sales and adjusted operating income. According to LiveMint, the company now expects fiscal 2027 net sales to grow between 4% and 5%, compared with its earlier forecast of 3.5% to 4.5%. However, third quarter adjusted earnings per share guidance of between 62 cents and 64 cents was below estimates of 68 cents, while net sales growth target of 3% to 3.75% was also lower. The results were boosted by US tariff refunds, although Walmart said the benefit was partially offset by price reductions. Walmart's shares have retreated in recent months, partly on concerns that the company's US growth could decelerate as investors hold a high bar due to its lofty valuation. As per Moneycontrol, the earnings report may foment anxiety about uneven economic signals and deteriorating consumer sentiment, with UBS Securities analyst Michael Lasser noting that while the broader long-term thesis remains intact, the company faces near-term challenges.
The S&P 500 consumer discretionary sector was the biggest weight, declining 1.3%, dragged by losses in Amazon and Tesla, while gains in Nvidia and Apple helped limit declines. The S&P 500 consumer staples index was down 1.6%, the biggest sectoral loser, as Walmart's sharp decline weighed on the sector. Declining issues outnumbered advancers by a 1.83-to-1 ratio on the NYSE and 1.68-to-1 ratio on the Nasdaq. The S&P 500 posted seven new 52-week highs and one new low, while the Nasdaq Composite recorded 28 new highs and 29 new lows. In early movers, Deere gained 4.1% after the company reported quarterly revenue and profit that exceeded analysts' expectations, with order trends suggesting its agricultural equipment business was positioned to accelerate following this year. Advance Auto Parts fell 22.2% after reporting lower-than-expected quarterly revenue, with CEO Shane O'Kelly noting that "tighter household budgets constrained spending more than we anticipated, especially during the last four weeks of the quarter."
