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T3's Take 3: Wal-Mart Takes a Pounding on Weak Guidance


Today's financial recap and tomorrow's financial outlook.

Today on T3 Live

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Wal-Mart Flops

Wal-Mart (WMT) shares tumbled 10.0% today, its biggest decline in in 15 years.

At its investor meeting, the company announced that its earnings will decrease 6% to 12% during fiscal 2017.

Wall Street analysts had been expecting a 4% gain, so this is a major disappointment.

Employee minimum wages have increased to $9, and will be further increased to at least $10 next year. Training programs for workers have also been extended. Total costs have added up to $1 billion this year, and another expected $1.5 billion for next year. 

Wal-Mart is also being hurt by the strong dollar, which is weighing on sales.

A two-year $20 billion stock buyback program was approved by the board, on top of its $15 billion program started in 2013.

US Markets

US equities danced around gains and losses throughout the day. The S&P 500 ultimately closed down 0.5%. 

The NASDAQ outperformed with a 0.3% gain due to strength in biotechnology and select tech stocks.

SanDisk (SNDK) closed up 11.4% at $68.79 after Bloomberg reported that the company was consulting with bankers to explore a sale. According to the report, Micron (MU), and Western Digital (WDC) have expressed in acquiring the company.

Consumer sectors experienced the greatest losses of the day due to the Wal-Mart news. The SPDR S&P Retail ETF (XRT) dropped 2.4%, marking its fourth straight day of losses. 

US economic data was weak across the board, with retail sales being a major disappointment. Not only did September retail sales miss expectations, but August's numbers were revised lower.

Yields were slightly lower today after the economic data release as investors opted for safety.

World Equity Markets

Asia fell on weak inflation data from China. The country's CPI rose by 1.6% last month, missing the 1.8% consensus. PPI dropped 5.9%, which was in-line with expectations.

The poor data followed yesterday's poor trade data, which showed Chinese imports fell by 20.4% in September, while exports declined 3.7%.

The Shanghai Composite closed down 1%, while the Hong Kong Hang Seng closed down 0.7%. 

Japan's Nikkei fell on renewed strengh in the yen. Sentiment that the US Fed may not raise interest rates until next year pushed the dollar down to 119.63 yen per dollar. Export-oriented stocks were the hardest hit, with commodities taking the brawn of the hit as Nippon Steel and Sumitomo Metal plunged over 5% each.

Europe fell into the red as well on the weak Chinese data. The German DAX closed down 1.2%, while the French CAC lost 0.7%. Mining stocks rallied after Mexican metals miner Fesnillo announced it will hit silver and gold production targets for the year.

Thursday's Financial Outlook

US economic data for tomorrow will include initial & continuing jobless claims, the closely-watched CPI report, empire manufacturing, weekly earnings, and EIA natural gas storage.

Overseas economic data will feature New Zealand CPI, Japan buying forienn bonds & tertiary industry index.

Charles Schwab (SCHW), Citigroup (C), Goldman Sachs (GS), KeyCorp (KEY), M&T Bank (MTB), Marriot Vacations (VAC), Philip Morris International (PM), PPG Industries (PPG), and UnitedHealth (UNH) wil release earnings before the open tomorrow. Advanced Micro (AMD), Mattel (MAT), and Schlumberger (SLB) will report after the close. 
No positions in stocks mentioned.
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