US: Wall St declines as Wal-Mart's weak forecast drags on retailers

[WASHINGTON] US stocks fell on Wednesday as Wal-Mart skidded after issuing a weak profit forecast, dragging down other big retailers, and as JPMorgan slipped after disappointing results.

The Dow Jones industrial average fell 157.14 points, or 0.92 per cent, to 16,924.75, the S&P 500 lost 9.45 points, or 0.47 per cent, to 1,994.24 and the Nasdaq Composite dropped 13.76 points, or 0.29 per cent, to 4,782.85.

The news added to worries about the outlook for US earnings, with S&P 500 profits forecast to have dropped more than 4 per cent in the third quarter compared with a year ago, according to Thomson Reuters data.

Following the market close, shares of Netflix sank 8.7 per cent to US$100.61 after the company reported U.S. subscriber additions below its own forecast.

Separately, CNBC said supermarket operator Albertsons'initial public offering was likely to price at US$20 or less as bidders are concerned about the Wal-Mart forecast, while First Data's IPO is likely to price at US$16. Earlier this month, Albertsons said it expected its IPO to price between US$23 and US$26 per share, and First Data estimated its would price between US$18 and US$20 a share.

During the regular session, Wal-Mart sank 10 per cent to US$60.03 in its biggest one-day percentage decline in years and its heaviest trading day since Jan 2009, after it forecast a drop of up to 12 per cent in earnings per share in fiscal 2017.

The decline erased about US$22 billion off the retailer's market value, and the stock was the biggest drag on both the Dow and S&P 500.

Also weighing on retailers, data showed retail sales in the United States barely rose in September.

Target was down 3.5 per cent at US$76.20, and Sears fell 3.0 per cent to US$24.41. The S&P 500 retail index dropped 1.2 per cent.

JPMorgan shares fell 2.5 per cent to US$59.99 after the bank reported disappointing third-quarter results late on Tuesday. "In these next three weeks in the earnings season, we're going to get some clear guidance not just on earnings for the third quarter but guidance for the fourth quarter and for next year. That's going to be crucial," said John Canally, investment strategist and economist for LPL Financial in Boston.

Wells Fargo fell 0.7 per cent to US$51.50, while Bank of America rose 0.8 per cent to US$15.64 both following results.

Among other big decliners, shares of Boeing dropped 4.3 per cent to US$134.22. Delta Air Lines' chief executive said he expects the market to be "ripe" for the carrier to buy used widebody planes over the next 12 to 36 months, as low interest rates have created a market bubble. Delta shares were up 1.8 per cent at US$48.59.

REUTERS