Wal-Mart earnings disappoint Wall Street

Wall Street lost some momentum today after Wal-Mart turned in a disappointing earnings report and government data showed a slightly higher number of jobless claims and a larger-than-expected trade deficit.

Analysts said investors were looking to cash in profits following a sharp run-up in the previous session. With the bulk of earnings over and bullish expectations high, the markets are in a period of consolidation, said Richard E. Cripps, chief strategist for Legg Mason of Baltimore.

“There’s nothing new occurring to give incentive for an awful lot of buying, so we’re seeing a bit of a pause on the retail stocks,” Cripps said.

“Wal-Mart put a damper on things, no doubt.”

The Dow Jones industrial average ended the day down 10.89, or 0.1 percent, at 9,837.94, following an advance of 111.04 yesterday.

The broader gauges were also little changed. The Nasdaq composite index lost 5.76, or 0.3 percent, to close at 1,967.35. The Standard & Poor’s 500 index closed down 0.15, or 0.01 percent, at 1,058.41.

A government report showed the US trade deficit widened to 41.3 billion in September, larger than the 40.2 billion shortfall economists forecast.

Import goods climbed to an all-time monthly high, a fresh sign of Americans’ appetite for foreign-made goods, and exports also posted solid gains, aided by a weaker US dollar.

Separately, new claims for unemployment benefits rose by a seasonally-adjusted 13,000 to 366,000 last week, the Labour Department reported. Even with the increase, the level of claims suggested that the labour market is stabilising, economists said.

With the four-week moving average of jobless claims at its lowest level since March 2001, there still could be cause for cheer this holiday season, said Lynn Reaser, chief economist and senior market strategist, Banc of America Capital Management.

“Overall, neither the outlook for retailers or the economic data should be cause for major concern,” Reaser said.

“With the gradual improvement in the jobs market, we think retail sales for the holiday season will be quite good.”

Analysts say investors may remain ambivalent through the end of the year, torn between collecting profits and holding their investments in case the market moves significantly higher. Some investors have worried that stock prices are too high.

Wal-Mart declined 2.44, or 4.2 percent, to 55.52, after its earnings missed analyst estimates by a penny, and indicated earnings for this quarter could also be below current forecasts. Its rival, Target Corp., matched expectations but also saw declines, losing 93 cents to close at 39.

Luxury retailer Tiffany & Co., which matched expectations, shed 3.43, or 7.1 percent, ending the day at 44.70. The jeweller reported a 20 per cent decline in quarterly profits, largely due to an unfavourable comparison to the year-ago period, when it had a tax benefit.

Dell Inc., which matched analyst expectations in results released in late afternoon, ended the day down 3 cents at 35.64. The computer equipment company reported strong sales and a rise in global server shipments.

Advancing issues outnumbered decliners about 5 to 4 on the New York Stock Exchange. Volume was moderate, with 1.32 billion shares traded, the same as Wednesday.

The Russell 2000 index, which tracks smaller company stocks, ended the day up 0.54, or 0.1 percent, at 541.20.