Wall St. falls as Wal-Mart's weak forecast drags on retailers

By Caroline Valetkevitch

(Reuters) - U.S. stocks fell on Wednesday as Wal-Mart skidded after issuing a weak profit forecast, dragging down other big retailers, and as JPMorgan slipped after disappointing results.

The news added to worries about the outlook for U.S. earnings, with S&P 500 profits forecast to have dropped more than 4 percent in the third quarter compared with a year ago, according to Thomson Reuters data.

Wal-Mart sank 10 percent to $60.03 in its biggest one-day percentage decline in years and heaviest trading day since January 2009, after it forecast a drop of up to 12 percent in earnings per share in fiscal 2017. The day's decline erased more than $20 billion off the retailer's market value, and the stock was among the biggest drag on both the Dow and S&P 500.

 

Also weighing on retailers, data showed retail sales in the United States barely rose in September.

Rival Target was down 3.5 percent at $76.20, and Sears fell 3.0 percent to $24.41. The S&P 500 retail index <.SPXRT> dropped 1.2 percent.

JPMorgan shares fell 2.5 percent to $59.99 after the bank reported disappointing third-quarter results late on Tuesday.

"In these next three weeks in the earnings season, we're going to get some clear guidance not just on earnings for the third quarter but guidance for the fourth quarter and for next year. That's going to be crucial," said John Canally, investment strategist and economist for LPL Financial in Boston.

The Dow Jones industrial average <.DJI> fell 157.14 points, or 0.92 percent, to 16,924.75, the S&P 500 <.SPX> lost 9.45 points, or 0.47 percent, to 1,994.24 and the Nasdaq Composite <.IXIC> dropped 13.76 points, or 0.29 percent, to 4,782.85.

Wells Fargo fell 0.7 percent to $51.50, while Bank of America rose 0.8 percent to $15.64 also following their results.

Among other big decliners, shares of Boeing dropped 4.3 percent to $134.22.

Shares of Delta Air Lines Inc rose 1.8 percent to $48.59 after it said it will put the brakes on its expansion of flight capacity in 2016, in a move to fill up more planes and sell more seats at higher fares.

Declining issues outnumbered advancing ones on the NYSE by 1,809 to 1,241, for a 1.46-to-1 ratio on the downside; on the Nasdaq, 1,759 issues fell and 1,005 advanced for a 1.75-to-1 ratio favouring decliners.

The S&P 500 posted 7 new 52-week highs and 5 new lows; the Nasdaq recorded 21 new highs and 57 new lows.

(Editing by Leslie Adler and Meredith Mazzilli)