Wall Street weakened as US Treasury yields continued their ascent, while shares of Walmart fell amid concern about declining margins.
Even as Walmart posted quarterly earnings and sales that beat analysts’ expectations, the stock declined more than 2 percent as the retailer said consolidated gross profit margin declined 15 basis points, while the gross margin rate at Walmart US fell 23 basis points “primarily due to price investments and higher transportation expenses.”
“The Street is trying to digest the margin performance and there are concerns around when they can make money given the large investments in e-commerce,” Brian Yarbrough, an analyst with Edward Jones, told Reuters.
In 2.30pm trading in New York, the Dow Jones Industrial Average fell 0.3 percent, while the Nasdaq Composite Index also shed 0.3 percent. In 2.14pm trading, the Standard & Poor’s 500 Index slid 0.3 percent.
The Dow moved lower as declines in shares of Cisco and those of Walmart, recently down 3.5 percent and 2.3 percent respectively, outweighed gains in shares of Coca-Cola and those of UnitedHealth Group, recently up 1.6 percent and 0.5 percent respectively.
While Cisco posted better-than-expected quarterly earnings, the stock slid. Investor perception is that the technology company is losing market share, Citigroup said in a research note, Reuters reported.
US Treasuries fell, lifting yields on the 10-year note as high as 3.12 percent.
In the latest US economic data, a Labour Department report showed initial claims for state unemployment benefits rose 11,000 to a seasonally adjusted 222,000 for the week ended May 12. Meanwhile, a Conference Board report showed its leading economic index (LEI) rose 0.4 percent in April.
"April's increase and continued uptrend in the US LEI suggest solid growth should continue in the second half of 2018," Ataman Ozyildirim, director of business cycles and growth research at The Conference Board, said in the report. “However, the LEI's six-month growth rate has recently moderated somewhat, suggesting growth is unlikely to strongly accelerate.”
"In April, stock prices and housing permits were the only negative contributors, whereas the labour market components, which made negative contributions in March, improved,” Ozyildirim noted.
In Europe, the Stoxx 600 Index finished the day with a 0.7 percent gain from the previous close. The UK’s FTSE 100 Index climbed 0.7 percent, Germany’s DAX Index rallied 0.9 percent, while France’s CAC 40 Index rose 1 percent.
Meanwhile, in a sweeping critique of global finance released by the Vatican on Thursday, Pope Francis singled out derivatives including credit-default swaps for particular scorn, Bloomberg reported. “A ticking time bomb,” the Vatican called them.
“The market of CDS, in the wake of the economic crisis of 2007, was imposing enough to represent almost the equivalent of the GDP of the entire world,” the Vatican said in the document, according to Bloomberg.
“The spread of such a kind of contract without proper limits has encouraged the growth of a finance of chance, and of gambling on the failure of others, which is unacceptable from the ethical point of view,” the Vatican said.