US Stocks Decline Amid Cautious Outlook and Political Uncertainties
On Thursday, US stocks retreated after investors scrutinized Walmart's cautious guidance and weighed the potential impact of President Trump's policy initiatives. The Dow Jones Industrial Average tumbled approximately 450 points, a decline of nearly 1%. The S&P 500 lost 0.5%, pulling back from its record-breaking close on Wednesday, while the tech-heavy Nasdaq Composite also shed around 0.5%.
Concerns about challenges facing corporations in the US intensified after Walmart reported stronger-than-expected quarterly profits but issued a conservative outlook for its fiscal year 2026. Shares of the retail giant plummeted by more than 6%. Walmart's decline, coupled with approximately 4% drops in Goldman Sachs and JPMorgan Chase, weighed heavily on the Dow.
President Trump's planned tariff measures, which have prompted companies like General Motors to consider significant business adjustments, present a looming challenge. The latest proposed policy change is an 8% reduction in Pentagon spending, which negatively impacted the stock price of Palantir by approximately 5%. Markets were already cautious amid anticipation of Trump's next steps, especially after a tense exchange with Ukraine's president heightened geopolitical concerns. As a result, investors sought safe havens, leading to a record high for gold.
Walmart's Cautious Outlook Dampens Market Sentiment
Walmart's cautious outlook for 2025 overshadowed its stronger-than-expected quarterly earnings. The company projected a 3-4% increase in net sales, in line with its long-term target of 4% annual growth. However, investors perceived this guidance as indicative of challenges ahead, leading to a sharp decline in Walmart's stock price and contributing to the broader market sell-off.
Policy Uncertainties Weigh on Sentiment
Investors also expressed concerns about the potential impact of President Trump's evolving policy initiatives on corporate performance and overall economic growth. Trump's proposed tariff measures have raised questions about their impact on businesses and consumers, while his planned Pentagon spending cuts have sparked worries about defense contractors and government spending. The uncertainty surrounding these policies has injected a degree of caution into market sentiment.
Rivian, Alibaba, and Amazon Make Notable Moves
While the broader market trended downward, certain companies reported positive developments. Rivian announced gross profits of $170 million in the fourth quarter, beating analysts' expectations. The company anticipates a smaller loss in 2025 compared to the previous year.
Alibaba released results that surpassed revenue estimates, highlighting continued momentum in artificial intelligence-related products. The Chinese tech giant's stock surged in premarket trading on Thursday.
Amazon Prime Video secured creative control of the iconic "James Bond" franchise, bolstering its position in the streaming wars. The company's MGM Studios division will partner with the Broccoli family to produce and distribute future "James Bond" films.