U.S. market indexes opened lower Wednesday and continued to report losses after retail stocks dragged on market valuations and the outlook for the sector continued to weaken. For the day the Dow Jones Industrial Average lost 216.82 points or 1.21% to close at 17,711.53. The S&P 500 was also down, closing at 2,064.48 for a loss of 19.91 points or 0.96%. The Nasdaq Composite closed lower at 4,760.69 for a loss of 49.19 points or 1.02%.
Disney (DIS, Financial), Macy’s (M, Financial) and Staples (SPLS, Financial) led stocks lower as the retail companies reported lower earnings and a weaker outlook. Disney reported earnings Tuesday after the closing bell with revenue and earnings that both missed analysts’ expectations. Second quarter revenue was $12.97 billion, up 4.1% from the comparable quarter and missing analysts’ expectations by $220 million. EPS of $1.36 missed analysts’ expectations by 4 cents. On Wednesday shares were down 4.31 points or 4.04% to close at $102.29.
On Wednesday Macy’s also reported earnings for the retail sector. Revenue was down 7.4% from the comparable quarter at $5.77 billion, missing estimates by $180 million. EPS was 40 cents, beating estimates by 4 cents. The stock fell 5.62 points or 15.18% to close for the day at $31.38.
Staples was also in the news Wednesday and actively traded as the company ended its merger deal with Office Depot. The stock fell 1.90 points or 18.34% to close at $8.46.
On Friday the market will get the retail sales report. Retail sales are expected to have increased 0.9% from the previous month, which would be an improvement over the previous month’s decline of 0.3%. Auto sales are expected to show significant improvement with a gain of 0.4% after the previous month’s gain of 0.1%. After the recent reports from the retail sector, it is likely that retail sales will fall below consensus.
In an interview with CNBC Wednesday, industry analyst Rick Snyder discussed his insight on the sector and Macy’s earnings report.
Start a free 7-day trial of Premium Membership to GuruFocus.
