Wall Street Slips as Walmart Warning, Jobless Claims Spark Economic Fears

The Dow Jones Industrial Average plummeted over 1.40% to 43,980 on Thursday as investors grappled with a mix of concerning economic data and Federal Reserve commentary. A disappointing forecast from retail giant Walmart, citing “uncertainties related to consumer behavior and global economic and geopolitical conditions,” sent shockwaves through the market. Walmart’s stock price subsequently dropped 6.5%, and the retail sector was further pressured by recent reports of weakening consumer spending. Major banks also suffered losses, with JPMorgan Chase and Goldman Sachs each falling over 4%.

Adding to the negative sentiment were higher-than-expected initial jobless claims, raising concerns about the resilience of the labor market. Initial Jobless Claims rose to 219,000, exceeding forecasts of 215,000 and the previous week’s figure of 214,000. Continuing Jobless Claims also climbed, reaching 1.869 million, surpassing expectations and the prior reading of 1.845 million. The Philadelphia Fed Manufacturing Survey also fell short of expectations, printing at 18.1 compared to a forecast of 20 and January’s strong 44.3 reading.

Despite the gloomy economic data, a potential bright spot emerged as the former president hinted at the possibility of a trade deal with China. This news led to a slight retreat in the US Dollar Index, which fell below 106.90.

Mixed messages from Federal Reserve officials further contributed to market uncertainty. The St. Louis Fed President warned about the risk of rising inflation expectations and stagflation, while the Atlanta Fed President suggested that two rate cuts could still be on the table this year, contingent upon economic conditions.

The Dow’s sharp decline reflects growing investor apprehension about the economic outlook. The index’s break below the key 44,000 level has intensified selling pressure. Technical analysis suggests that a failure to hold above 43,900 could pave the way for further losses, potentially targeting the 100-day moving average around 43,480. A recovery above 44,200 is seen as necessary to alleviate the current bearish sentiment.