Economic Concerns Weigh on Stocks after Walmart’s Weak Forecast

The S&P 500 Index ($SPX) (SPY) today is down -0.85%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -1.23%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -1.06%.  March E-mini S&P futures (ESH25) are down -0.89%, and March E-mini Nasdaq futures (NQH25) are down -1.02%. 

Stocks are under pressure today, with the Dow Jones Industrials falling to a 1-week low.  Today’s weak forecast from Walmart has raised concerns about consumer demand and is weighing on stocks.  After forecasting lower-than-expected full-year profit, Walmart is down more than -6%, citing an uncertain economic environment.  Stocks are also retreating today due to concerns that President Trump’s tariff plans will boost inflation and undercut economic growth. 

Lower T-note yields today support stocks, with the 10-year T-note yield down -3.1 bp.  T-note yields are falling today after weekly US jobless claims rose more than expected and on carryover support from Wednesday’s minutes of the Jan 28-29 FOMC meeting that indicated that the FOMC might slow or halt its quantitative tightening process until the debt ceiling is raised.

T-note yields also fell today on comments from Treasury Secretary Bessent, who said any move by the Treasury to boost the share of longer-term Treasuries in government debt issuance is a “long way off” due to current hurdles like elevated inflation and the Fed’s quantitative tightening program. 

US weekly initial unemployment claims rose +5,000 to 219,000, showing a weaker labor market than expectations of 215,000. 

The US Feb Philadelphia Fed business outlook survey fell -26.2 to 18.1, stronger than expectations of 14.3.

US Jan leading indicators fell -0.3% m/m, weaker than expectations of -0.1% m/m.

The markets are discounting the chances at 2% for a -25 bp rate cut at the next FOMC meeting on March 18-19.

Overseas stock markets today are mixed.  The Euro Stoxx 50 is up +0.13%.  China’s Shanghai Composite Index recovered early losses and closed down -0.02% after President Trump said it would be “possible” to reach a new trade deal with China.  Japan’s Nikkei Stock 225 fell to a 2-1/2 week low and closed down -1.24%.

Interest Rates

March 10-year T-notes (ZNH25) today are up by +7 ticks.  The 10-year T-note yield is down by -3.1 bp to 4.501%.  March T-note prices are moderately higher today on carryover support from Wednesday, when the FOMC minutes indicated that the FOMC might slow or halt its quantitative tightening process until the debt ceiling is raised.  T-note prices also found support from today’s US news that showed weekly jobless claims rose more than expected and Jan leading indicators fell more than expected.  In addition, T-notes garnered support today on comments from Treasury Secretary Bessent, who said any move by the Treasury to boost the share of longer-term Treasuries in government debt issuance is a “long way off.”

European government bond yields today are mixed.  The 10-year German bund yield fell from a 3-week high of 2.564% and is down -2.2 bp to 2.535%.  The 10-year UK gilt yield climbed to a 3-1/2 week high of 4.635% and is up +0.1 bp to 4.612%.

The Eurozone Feb consumer confidence index rose +0.6 to a 4-month high of -13.6, stronger than expectations of -14.0.

German Jan PPI fell -0.1% m/m and rose +0.5% y/y, weaker than expectations of +0.6% m/m and +1.2% y/y.

ECB Governing Council member Simkus said, “he agrees with market expectations” for an ECB interest rate cut in March and two more by the end of the year.

ECB Governing Council member Stournaras said the balance of macroeconomic risks in the Eurozone “has shifted from concerns about high inflation to concerns about low growth,” and the ECB’s key interest rate “could fall to around 2% in the course of 2025.”

Swaps are discounting the chances at 96% for a -25 bp rate cut by the ECB at the March 6 policy meeting.

US Stock Movers

Walmart (WMT) is down more than -6% to lead losers in the Dow Jones Industrials and retail stocks lower after forecasting net sales growth of 3% to 4% for the upcoming year, lower than the 5% growth seen in the last fiscal year.  Also, Target (TGT), Dollar Tree (DLTR), and Costco Wholesale (COST) are down more than -1%. 

EPAM Systems (EPAM) is down more than -15% to lead losers in the S&P 500 after forecasting 2025 adjusted EPS of $10.45-$10.75.  well below the consensus of $11.42. 

Carvana (CVNA) is down more than -15% after reporting Q4 wholesale vehicle gross profit per unit of $674.00, weaker than the consensus of $714.21. 

Palantir Technologies (PLTR) is down more than -11% to lead losers in the Nasdaq 100, adding to Wednesday’s -9% drop on concern about reduced US defense spending after Defense Secretary Hegseth announced plans to reduce US military spending by 8% over the next five years. 

Cruise line operators are falling today after Commerce Secretary Lutnick suggested that cruise operators could start to pay taxes under the External Revenue Service program.  As a result, Royal Caribbean Cruises Ltd (RCL) is down more than -10%.  Also, Carnival (CCL) and Norwegian Cruise Line Holdings (NCLH) are down more than -8%, and Viking Holdings Ltd (VIK) is down more than -4%.

Axon Enterprise (AXON) is down more than -9% after Craig-Hallum Capital Group LLC downgraded the stock to hold from buy.

Celanese Corp (CE) is down more than -5% after RBC Capital Markets downgraded the stock to sector perform from outperform. 

International Flavors & Fragrances (IFF) is down more than -3% after CFRA double-downgraded the stock to sell from buy.

Hasbro (HAS) is up more than +10% to lead gainers in the S&P 500 after reporting Q4 adjusted EPS of 46 cents, better than the consensus of 34 cents and said it is targeting mid-single-digit sales growth through 2027 with savings of about $1 billion.

Baxter International (BAX) is up more than +7% after reporting Q4 sales continuing operations of $2.75 billion, better than the consensus of $2.67 billion.

LKQ Corp (LKQ) is up more than +5% after reporting Q4 adjusted EPS from continuing operations of 80 cents, higher than the consensus of 73 cents.

Ormat Technologies (ORA) is up more than +4% after Jeffries upgraded the stock to buy from hold with a price target of $78.

Lam Research (LRCX) is up more than +2% to lead gainers after Susquehanna Financial upgraded the stock to positive from neutral with a price target of $125.

Ansys Inc (ANSS) is up more than +1% after reporting Q4 revenue of $882.2 million, stronger than the consensus of $848.1 million.

Earnings Reports (2/20/2025)

EPAM Systems Inc (EPAM), Builders FirstSource Inc (BLDR), Quanta Services Inc (PWR), LKQ Corp (LKQ), Hasbro Inc (HAS), Targa Resources Corp (TRGP), CenterPoint Energy Inc (CNP), Baxter International Inc (BAX), Pool Corp (POOL), Walmart Inc (WMT), Southern Co/The (SO), Alliant Energy Corp (LNT), Booking Holdings Inc (BKNG), Newmont Corp (NEM), Insulet Corp (PODD), Consolidated Edison Inc (ED), VICI Properties Inc (VICI), Akamai Technologies Inc (AKAM), Live Nation Entertainment Inc (LYV), Copart Inc (CPRT).