US stocks fall after Walmart’s profit warning, dragging other retail names lower

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Wall Street’s main indexes opened lower on Tuesday after Walmart’s profit warning heightened fears in the retail sector that consumers were cutting back on discretionary spending in the face of decades-high inflation.

The Dow Jones Industrial Average fell by 87 points, or 0.3%. The S&P 500 lost 0.4% and the Nasdaq Composite declined 0.8%.

Late Monday Walmart lowered its profit outlook in the middle of the quarter, something it rarely does. The world’s largest retailer said rising prices for food and gas are forcing shoppers to cut back on discretionary items, particularly clothing, that carry higher profit margins.

Walmart plunged 8% Tuesday and dragged other retailers with it. Target and Kohl’s each dropped about 5%, while Amazon and Dollar General each fell 4%. Costco shed 3%. The SPDR S&P Retail ETF was down by more than 4%.

Traders are bracing for a widely expected 75-basis-point Fed rate rise on Wednesday, part of campaign to tackle inflation. The International Monetary Fund cut its global growth outlook for this year and next, warning that the world economy may soon be on the cusp of an outright recession.

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