Stocks sink after weak profit report from Walmart
Wall Street opened lower Tuesday, dragged down by weak profit reports from some of the biggest names in corporate America.
The S&P 500 fell 29 points, or 0.7%, to 3,927 points shortly after the start of trade, while the Dow Jones Industrial Average slid 0.5%. The tech heavy Nasdaq Composite dropped nearly 1%.
Walmart shares are plunging after the nation's biggest retailer lowered its profit forecast and said surging inflation on basics like food that is making shoppers cut back. GM is down 4% after saying computer chip and parts shortages hobbled factory output in the second quarter.
Investors are focused this week on what is shaping up to be another sharp interest rate hike by the Federal Reserve. The central bank on Wednesday is expected to announce a rate hike of up to three-quarters of a percentage point, triple the usual margin, as the Fed continues an aggressive push to stem four-decade high inflation. That would put the Fed's benchmark rate in a range of 2.25% to 2.5%, the highest since 2018 before the coronavirus pandemic.
U.S. inflation has accelerated to 9.1%, its highest since 1981. The U.S. economy is slowing, but healthy hiring shows it isn't in recession, Treasury Secretary Janet Yellen said Sunday. Fed officials who publicly support a rate hike also cite a strong job market as evidence the economy can stand higher borrowing costs.
On Thursday, the Commerce Department is due to release U.S. economic growth estimate for the thee months ending in June. Some forecasters expect a second quarter of contraction after output shrank 1.6% in the three months ending in March.