Wal-Mart Sales Slump Sends Stocks Sliding
Posted on: Monday, 23 August 2004, 06:00 CDT
NEW YORK - Wal-Mart Stores Inc.'s warning of disappointing sales sent stocks lower Monday, as investors' concerns about a slowing economy offset their relief over a drop in oil prices.
October contracts for a barrel of light crude were quoted at $46.58, down 14 cents, on the New York Mercantile Exchange. With oil topping $49 per barrel last week, the recent downturn has cheered investors hoping to take advantage of a severely oversold market.
However, Wal-Mart's warning about lower than expected August sales curbed investors' enthusiasm; with its reach among consumers, Wal-Mart is seen as a barometer of an already struggling retail sector.
In the first hour of trading, the Dow Jones industrial average was down 15.41, or 0.2 percent, at 10,094.73.
Broader stock indicators were narrowly lower. The Standard & Poor's 500 index dropped 1.60, or 0.2 percent, to 1,096.75, and the Nasdaq composite index was down 2.37, or 0.1 percent, at 1,835.65.
Wal-Mart lowered its August sales forecasts, citing lower back-to-school sales and lost business in Florida from Hurricane Charley. Sales are now expected to range from flat to 2 percent higher. Wal-Mart tumbled $1.37 to $53.28.
Wall Street was pleased with FedEx Inc.'s upbeat outlook, however, seeing the improved forecast as a sign that higher energy costs would not pressure quarterly earnings as much as previously believed. FedEx gained $2.29 to $81.59 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 42 cents at $16.03 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 66 cents to $11.24.
Kmart Holding Co. completed the sale of 18 stores to the Home Depot Inc. for $271 million, allowing the discount retailer to continue consolidating its stores while giving the home improvement retailer room to grow. Kmart fell 83 cents to $75.72, while Home Depot slid 59 cents to $35.77.
Advancing issues outnumbered decliners by more than 3 to 2 on the New York Stock Exchange, where volume came to 123.83 million shares, compared to 133.31 million at the same point on Friday.
The Russell 2000 index of smaller companies was down 3.02, or 0.6 percent, at 544.90.
Overseas, Japan's Nikkei stock average rose 0.7 percent. In afternoon trading, Britain's FTSE 100 was up 1.1 percent, Germany's DAX index surged 1.7 percent, and France's CAC-40 gained 1.6 percent.
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