U.S. stock futures were lower 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 were down 0.3 percent and 0.4 percent, respectively.
A late Monday announcement from Walmart, which cut its quarterly and annual profit forecasts due to rising food inflation, unnerved investors, who discussed the implications for other retail stocks. The big retailer said the higher prices are incentivizing consumers to forgo general merchandise spending, particularly in apparel.
Walmart tumbled nearly 9% in extended trading and dragged other retailers down with it. Target fell 5% and Amazon fell 4%. Macy’s and Dollar General each fell 3%, while Costco lost 2%.
“Clearly they have the wrong stuff and they need to sell it more aggressively to clear what looks like there’s going to be a pretty dramatic hit as a result,” Jeremy Bryan, senior portfolio manager at Gradient Investments, said during on CNBC’s “Closing Bell: Overtime.”
“The question is, how does that 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 Nasdaq Composite lagged behind, down 0.4%. All major averages are on track for their best month of the year.
Traders are bracing for an onslaught of megacap tech earnings and economic data this week, as well as the outcome of the Federal Reserve meeting, which will help Wall Street guide its expectations for the rest of the year.
“I think there’s going to be a bifurcated market,” VantageRock’s Avery Sheffield said on CNBC’s “Closing Bell: Overtime.” “I think the bottom may be in certain stocks but nowhere in others. So this could actually 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 are widely expecting a rise of three-quarters of a percentage point.
Coca-Cola, McDonald’s and General Motors are set 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 a.m. ET.
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