Wal-Mart’s quarterly earnings report and concern about the fiscal cliff preoccupied investors on Thursday.
The ongoing fiscal cliff drama combined with a disappointing report from Wal-Mart (NYAEARCA:WMT) to send the major American stock indices into the red on Thursday. Investors were not impressed with Wal-Mart’s classic rendition of “beat the number” as it appeared in the earnings report. Wal-Mart’s earnings report fit the sarcastic standard for “beat the number” with its disclosed quarterly earnings of $1.08 per share, which were exactly one penny above the estimate, despite sales which fell a tidy one billion dollars short of the expected $114.9 billion. Wal-Mart’s share price spent Thursday approximately 3.50 percent lower than Wednesday’s closing price. Wal-Mart’s performance is closely watched as a measure of the health of the overall economy. Because the company sells everything from home construction products to food with a targeted (no pun intended) middle-income consumer base, sluggish sales for Wal-Mart are often understood to signal a sluggish economy. Chart courtesy of Stockcharts.com
Adding to bearish sentiment was the Department of Labor’s weekly report on initial unemployment claims, which indicated an increase of 78,000 new claims, compared with the anticipated increase of 21,000 new claims. Congress Hurts Stocks: A Chat with Author Eric Singer
As of 3:48 EST, the Dow Jones Industrial Average sank by 23 points (0.18 percent) to 12,547. The S&P 500 Index fell 0.40 percent to 1,350 – staying below its 50-day moving average of 1,430 and its 200-day moving average of 1,382 (NYSEARCA:SPY). As the S&P 500 remains below its 200-day moving average after a triple top (see green bar on chart) there is a serious risk that the index could make a further decline. The Nasdaq Composite declined 0.32 percent to 2,837 (NASDAQ:QQQ). The Russell 2000 Index fell 0.83 percent to 766 (NYSEARCA:IWM).
The “Dollar Bull” Index ETF (NYSEARCA:UUP) declined by 1 cent (0.05 percent) to 22.19 as of 2:27 EST.
As of 2:18 EST, the S&P 500 Volatility Index – or VIX – advanced 1.90 percent to 18.26 and the VIX Short-Term Futures ETN made an 2.56 percent advance to 36.92 (NYSEARCA:VXX).
The major European stock indices made significant declines on Thursday after GDP reports indicated that the Eurozone has fallen back into recession. The Euro STOXX 50 Index finished Wednesday’s trading session with a 0.45 percent decline to 2,461 — remaining below its 50-day moving average of 2,517 (NYSEARCA:FEZ). The FTSE 100 Index dropped 0.77 percent to 5,677 (NYSEARCA:EWU). The German DAX Index sank 0.82 percent to 7,043 (NYSEARCA:EWG). France’s CAC 40 Index fell 0.52 percent to 3,382 (NYSEARCA:EWQ). Spain’s IBEX 35 Index advanced 0.29 percent to 7,695 (NYSEARCA:EWP). Italy’s FTSE MIB Index declined 0.59 percent to 15,162 (NYSEARCA:EWI).
As of 2:28 EST, the euro advanced 0.31 percent against the dollar, trading at $1.2774 (NYSEARCA:FXE).
On London’s ICE Futures Europe Exchange, January futures for Brent crude oil declined by 42 cents (0.39 percent) to $108.06/bbl. (NYSEARCA:BNO, NYSEARCA:USO).