Stock Market Today: Dow Drops After Cisco, Walmart Earnings

Jhon

8 months ago

Momentum heading stocks to a third straight weekly win stalled Thursday as investors digested several economic reports and a handful of corporate earnings updates.

The starting point was data from the Department of Labor that showed Unemployment claims jumped from 13,000 last week to 231,000, a three-month high.

"The jobless claims were a welcome addition to recent data that pointed to a slight cooling in the labor market and, perhaps, the US economy," he says Craig Erlam, senior market analyst at OANDA. "Of course, we're talking about a very small step in the right direction, from the Fed's perspective, and it will need to be supported by a lot more in the coming months, but it's a start."

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Also on the economic calendar was data from the Federal Reserve, which showed that industrial production fell a more than expected 0.6% in October. Manufacturing production fell 0.7%.

"Much of this decline was due to a 10% drop in motor vehicle and spare parts production that was affected by strikes Across several major motor vehicle manufacturers, the manufacturing industry index excluding motor vehicles and spare parts increased by 0.1%," the report stated.

Fighting in factories likely to continue, says Priscilla Thiagamoorthy, senior economist at BMO Capital Markets, as recent Fed surveys underscore weak momentum. "High borrowing costs are likely to undermine consumer demand and business investment, affecting factory production," the economist adds.

Cisco sinks after its results

As for today's earnings news, cisco systems (CSCO) plummeted 9.8% after the company revealed its fiscal first-quarter results. While the network equipment specialist beat results, it gave weaker-than-expected second-quarter fiscal guidance and lowered its full-year forecast.

"After three quarters of exceptionally strong product delivery, our customers are now focused on installing and deploying these unprecedented levels of products," Cisco CEO Chuck Robbins said on the company's earnings call. "Simply put, customers are now taking the time to onboard and implement these stepped-up product deliveries," which is leading to a slowdown in new orders.

Walmart shares lose $37 billion in market value

Walmart (WMT) was another Dow Jones Stocks which plummeted after earnings. The discount retailer's third-quarter results were more than analysts expected, while customer transactions and average ticket were higher year-over-year. WMT also said global e-commerce sales rose 15%.

However, Walmart stock fell 8.1%, erasing $37 billion in market value, after a cautious forecast. Specifically, Walmart anticipates full-year earnings per share of $6.40 to $6.48 versus analysts' estimate of earnings of $6.48 per share. The company also expects revenue to grow between 5% and 5.5%, while analysts anticipate top-line growth of 5.1%.

Weakness in these two frontline stocks had the Dow Jones Industrial Average lagged its peers, with the 30-stock average closing down 0.1% at 34,945. He S&P 500 (+0.1% to 4,508) and the Nasdaq Compound (+0.07% to 14,113) ended the day with marginal gains.