US stock futures fell on Monday night after Walmart cut its profit forecast, sending the retailer’s shares lower after hours.
Dow Jones Industrial Average futures fell 133 points, or 0.4%. S&P 500 and Nasdaq 100 futures declined 0.3% and 0.4%, respectively.
An announcement late Monday by Walmart, which cut its quarterly and annual profit estimates due to rising food inflation, alarmed investors weighing the implications for other retail stocks. The big-box retailer said higher prices are spurring consumers to cut back on general merchandise spending, particularly on clothing.
Walmart fell nearly 9% in extended trading, dragging other retailers down with it. Target fell 5% and Amazon fell 4%. Macy’s and Dollar General were down 3% each, while Costco was down 2%.
“Clearly, they’ve got the wrong stuff and they need to sell more aggressively to clear it out, which looks like they’re going to take a pretty dramatic hit as a result of that,” Jeremy Bryan, senior portfolio manager at Gradient Investments. he said during CNBC’s “Closing Bell: Overtime.”
“The question is, how does this relate to the rest of the discretionary space?” Bryan added.
Stocks traded in a narrow range during Monday’s session, with the S&P 500 adding 0.1%. The Dow Jones Industrial Average rose 90.75 points, or 0.3%. The tech-heavy Nasdaq Composite was a laggard, falling 0.4%. All major averages are headed for their best month of the year.
Traders are bracing for a flurry of technology gains and large-cap economic data this week, as well as the outcome of the Federal Reserve meeting, which will help Wall Street steer its expectations for the rest of the week. year.
“I think there’s going to be a bifurcated market,” VantageRock’s Avery Sheffield said during CNBC’s “Closing Bell: Overtime.” “I think the bottom could be in certain stocks, but nowhere in others. So this could be one of the most dynamic earnings seasons we’ve seen in a long time.”
On Tuesday, the Federal Reserve will begin its two-day policy meeting. Traders widely expect a rise of three-quarters of a percentage point.
Coca-Cola, McDonald’s and General Motors are due to report earnings on Tuesday before the bell. Alphabet, Microsoft, Chipotle Mexican Grill, UPS and Enphase Energy will report after the bell.
On the economic front, traders await the latest reading of the Case-Shiller home price index at 9 a.m. ET. The consumer confidence report and new home sales data are due at 10:00 a.m. ET.