Posted on: Tuesday, August 24, 2004
Wal-Mart forecast adds to market's glumness
By Michael J. Martinez
Associated Press
NEW YORK — A disappointing sales forecast from Wal-Mart Stores Inc. sent stocks mostly lower yesterday as investors worried that oil prices, which stabilized after last week's highs, could curb consumer spending and hurt companies' third-quarter earnings. Tech stocks eked out minimal gains.
"I think you can make the case that Wal-Mart is related to oil, since oil prices have acted as a kind of tax on consumers that has restricted their spending," said Joseph Keating, chief investment officer at AmSouth Asset Management in Birmingham, Ala. "I think this plays into people's concerns that earnings will be impacted. But we're also seeing oil fall, and barring some sort of major supply disruption, I think they'll continue to fall."
October contracts for a barrel of light crude settled at $46.05, down 67 cents, on the New York Mercantile Exchange.
Wal-Mart lowered its August sales forecasts, citing lower back-to-school sales and lost business in Florida from Hurricane Charley. Sales at stores open at least a year — a standard for assessing a retailer's strength — are now expected to range from flat to 2 percent higher. Wal-Mart fell 85 cents to $53.80.
Most investors, however, remained on the sidelines, and little movement in stocks is expected this week, given the Republican National Convention next week and the release of key employment data next Friday.
Declining issues outnumbered advancers by nearly 8 to 5 on the New York Stock Exchange, where volume came to 1.32 billion shares, compared with 1.5 billion Friday.
Wal-Mart's warning about lower-than-expected August sales squelched the market's enthusiasm over falling oil prices. With its reach among consumers, Wal-Mart is seen as a barometer of an already struggling retail sector, and even of the economy as a whole.
