On Thursday, the stock market witnessed a downturn, impacted by concerns over economic forecasts and corporate earnings. This came a day after the S&P 500 marked a new record high, which was quickly overshadowed by disappointing projections from key companies.
The Dow Jones Industrial Average experienced a significant drop of 607 points, equivalent to a 1.3% decline. Similarly, the S&P 500 fell by 0.8%, and the Nasdaq Composite mirrored this downturn. The retail giant, Walmart, which forms part of the Dow, saw its shares plummet by more than 6% after releasing a forecast that fell short of analysts’ expectations. Walmart anticipates fiscal year sales to grow between 3% and 4%, with its 2026 earnings outlook being a particular point of concern for investors.
Tom Fitzpatrick of R.J. O’Brien and Associates emphasized the broader implications of Walmart’s guidance, suggesting it might indicate a strain on consumer spending power. The apprehension surrounding Walmart’s forecast had a ripple effect, with fellow retailers Target and Costco both experiencing more than a 1% decline in their stock values. Meanwhile, Palantir was another notable mover, dropping over 12% amid reports of potential budget cuts at the Department of Defense.
The broader economic landscape added to the market’s challenges. The Conference Board’s Leading Economic Index revealed a surprising contraction in January, with Treasury yields responding by declining. Financial institutions, including Goldman Sachs and Morgan Stanley, also saw decreases in stock prices. On the other hand, there was some optimism in specific sectors, with Bank of America projecting a positive impact from recent executive orders on in vitro fertilization for Progyny.
In the tech sector, Citi upgraded NXP Semiconductors to a buy status, citing a recovery in analog semiconductors, which could spur further growth for the company. A positive turn was seen in the Philadelphia manufacturing index, which, despite a dip from the previous month, exceeded expectations and indicated continued expansion. Despite these mixed signals, Berkshire Hathaway’s decision to sell additional shares of DaVita did not go unnoticed, as their stake in the company further decreased.
Furthermore, global markets reacted to various policy announcements and economic indicators. In Asia, markets were influenced by the dual factors of proposed U.S. tariffs and expected ongoing rate hikes. Japanese and South Korean indices saw declines, while Australian and Indian markets also trended lower. In contrast, European markets opened with mixed results, reflecting a waning momentum within the region’s stock indices.
Overall, Thursday’s market activities were dominated by investor reactions to disappointing corporate forecasts and subdued economic indicators. While certain stock upgrades and policy actions provided localized optimism, the broader sentiment was one of caution. Investors continue to navigate a volatile market landscape as they assess economic signals and corporate strategic directions.
