Picking up on the heels of disappointing retail sales figures for September, the bears managed to send the S&P 500 lower to the tune of 0.47% today.
The index’s close at $1994.24 still leaves it within reach of a break above some key technical ceilings, though it’s facing the wrong direction now.
And it was Best Buy Co. Inc. (NYSE:BBY), Cepheid (NASDAQ:CPHD) and Walmart Stores, Inc. (NYSE:WMT) that did much of the damage on Wednesday.
Here’s what investors need to know.
Walmart Stores (WMT)
Leading the bearish charge today was Walmart Stores, after the discount retailer unveiled an outlook for the next couple of years that was less than thrilling.
Thanks to a relatively expensive wage increase for its workers, in addition to an even costlier increase in spending on its e-commerce efforts, Walmart anticipates disappointing earnings growth both for this year and next year despite rising sales.
Specifically, the retailer now expects per share earnings of WMT stock to come in between $4.40 and $4.70 this year, with next year’s net income poised to slide between 6% and 12%.
It wasn’t what analysts and major shareholders were expecting to hear at the company’s “Investor Day” event this morning, even if the expenses were ultimately designed to drive long-term growth the company couldn’t have achieved otherwise.
WMT finished the session down a stunning 10%.
Best Buy Co Inc. (BBY)
It’s not clear to what extent the demise of WMT today took a toll on Best Buy, and how much of the 5% pullback BBY suffered on Wednesday was due to other concerns. In the end though, it doesn’t really matter.
Yes, if Walmart is struggling, there’s a good chance its peers and competitors are too. Traders connected those dots today, as well, ignoring the fact that Walmart’s woes were rather company specific.
At the same time, investors may have upended BBY as much if not more based on lackluster retail spending for September. Though the U.S. Census Bureau reported a 0.1% increase in retail sales for last month, economists were calling for a 0.2% improvement … and auto sales carried all the weight of that growth (and then some).
Investors may have also finally taken notice of the fact that consumer spending slowed down rapidly in September when the market started to stumble, and that chill could linger all the way through the fourth quarter.
That would put Best Buy on a very tight spot during its crucial holiday shopping period.
Cepheid (CPHD)
Last but certainly not least, Cepheid shares are getting crushed today following the molecular diagnostic company’s warning to CPHD shareholders that its upcoming third-quarter results would be less than what was hoped for.
The specifics: The preliminary projections suggest the company will lose 32 cents per share of CPHD versus expectations for a loss of only 26 cents per share.
Also, Cepheid has lowered its full-year revenue outlook to a range between $537 million and $541 million, against analysts’ consensus estimate of $548.9 million.
Although neither outlook helped, it was the reeled-in revenue guidance that drove the bulk of the 22% tumble from CPHD on Wednesday.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
