Walmart’s Big Gains Can’t Stem Sharp Market Declines

New York (May 19)  The world's biggest retailer, Walmart (WMT), was in rally mode but it couldn't stem the losses felt elsewhere on markets Thursday. The S&P 500 erased all year-to-date gains as stock losses deepened on worries over the Federal Reserve's rate hike plans. The S&P 500 fell 0.85%, the Dow Jones Industrial Average slipped 1%, and the Nasdaq slid 1%.

The June meeting is definitely a live one for a possible rate hike, New York Federal Reserve President William Dudley said at a media briefing in New York. Dudley confirmed that a June or July hike was possible if data confirm the Fed's optimistic economic outlook. Minutes from the Fed's April meeting released on Wednesday suggested many members would be comfortable raising rates as soon as June, more quickly than even the most hawkish of economists' forecasts. Fed members said a June hike is contingent on a stronger job market and signs inflation is "making progress" toward the central bank's 2% target. A June rate hike now has a 26% probability, according to CME Group.

A number of retailers trounced lowered expectations, pulling consumer stocks higher for the session. Walmart jumped 9% after reporting same-store sales double estimates in its first quarter and a solid forecast for its second quarter. The retailer reported U.S. same-store sales growth of 1% amid a 1.5% increase in traffic. Analysts had expected 0.5% growth in same-store sales. Earnings of 98 cents a share topped estimates by a dime.

Teen retailer American Eagle Outfitters (AEO) reported a better-than-expected first quarter as digital traffic drove a 7.1% sales increase. Its namesake brand, which generates the most sales, saw a 4% increase in comparable-store sales.

Source: TheStreet