Wal-Mart report sends stocks lower
NEW YORK – A disappointing sales forecast from Wal-Mart Stores Inc. sent stocks mostly lower Monday as investors worried that oil prices, which stabilized after last week’s highs, would curb consumer spending and hurt companies’ third-quarter earnings. Tech stocks eked out minimal gains.
Wal-Mart’s warning about lower than expected August sales squelched the market’s enthusiasm over falling oil prices. With its reach among consumers, Wal-Mart is seen as a barometer of an already struggling retail sector, and even the economy as a whole.
October contracts for a barrel of light crude were quoted at $46.00, down 72 cents, on the New York Mercantile Exchange. With oil topping $49 per barrel last week, the downturn could encourage risk-tolerant investors to return to the market. However, very light volume meant most investors were sitting out Wall Street’s traditional summer doldrums.
The Dow Jones industrial average dropped 37.09, or 0.4 percent, to 10,073.05.
Broader stock indicators were narrowly mixed. The Standard & Poor’s 500 index fell 2.67, or 0.2 percent, to 1,095.68, and the tech-focused Nasdaq composite index was up 0.68, or 0.04 percent, at 1,838.70.
Wall Street was pleased with FedEx Inc.’s upbeat outlook, seeing the improved forecast as a sign that higher energy costs would not pressure quarterly earnings as much as previously believed. FedEx gained $1.65 to $80.95 after raising its outlook for its first quarter and full 2005 earnings, crediting strong international express and ground shipments.
Toys “R” Us Inc. was up 43 cents at $16.04 after earning 28 cents per share for the quarter, thanks to one-time tax benefits. The company missed analysts’ revenue forecasts by nearly $100 million, however, and posted an operating loss as well.
World Wrestling Entertainment Inc. saw its first-quarter earnings more than double, thanks to strong home video and pay-per-view sales of its wrestling extravaganzas. WWE, which lowered its outlook for fiscal 2005, dropped 24 cents to $11.66.
Declining issues outnumbered advancers by nearly 8 to 5 on the New York Stock Exchange, where volume was 1.25 billion shares.