Stocks were trading lower on Tuesday as the markets focused on a weak sales outlook from Wal-Mart Stores instead of its stellar earnings report and shrugged off a stronger-than-expected rise in April retail data, excluding autos sales.
On Tuesday, the Dow Jones industrial average was trading 33.30 points, or 0.26%, lower at 12,843.01. The broader S&P 0 index edged down 2.89 points, or 0.21%, to trade at 1,400.69. The tech-heavy Nasdaq composite index was down 3.65 points, or 0.15%, at 2,484.84.
Wal-Mart Stores (WMT) shares dropped after the world's largest retailer posted a 6.9% rise in fiscal first-quarter net income to 76 cents per share, vs. 68 cents a year earlier, on a 10% rise in revenue. Low prices and operational changes helped offset higher energy costs and food inflation. But the company gave a cautious outlook for the current quarter, saying earnings may miss analysts' expectations and that there will be little, if any, U.S. same-store-sales growth.
The tech sector was under pressure despite evidence of growing M&A activity. Hewlett-Packard Co. (HPQ) agreed to acquire Electronic Data Systems (EDS) for $25 per share, or an enterprise value of about $13.9 billion. Hewlett-Packard expects the deal to boost fiscal 2009 non-GAAP EPS and fiscal 2010 GAAP EPS.
Separately, Hewlett-Packard sees preliminary non-GAAP EPS at 87 cents in the second quarter (to be released May 20), ahead of the 84-cent consensus view. The company raised its fiscal 2008 revenue guidance to $114.2 billion to $114.4 billion from $113.5 billion to $114 billion, and increased its non-GAAP EPS view to $3.54-$3.58 from $3.50-$3.54.
On the economic data front, April retail sales fell 0.2%, vs. a median estimate of a 0.1% decline, but the ex-auto aggregate jumped 0.5%, more than the 0.3% hike that was expected. The March ex-auto component was revised to a 0.4% gain from 0.1%. Vehicles & Parts dropped a hefty 2.8%, which is consistent with the 5% drop in unit vehicle sales. The housing-related components revealed a notable bounce from recent weakness, with building materials climbing 2.0%, furniture inching up 0.1%, and electronics up 1.4%.
U.S. import prices surged 1.8% in April, more than the 1.5% rise that was anticipated, while export prices rose 0.3%, less than the median forecast of a 0.5% increase.
Business Inventories rose a better-than-expected 0.1% in March, vs. the expected 0.5% increase, after a 0.5% hike in February.
Oil prices reversed from an earlier decline despite expectations that U.S. crude supplies probably gained for a fourth straight week on falling demand in the world's largest consumer economy. Crude supplies probably grew by 2.5 million barrels to 325.6 million barrels in the week ended May 9, according to the median of responses in a Bloomberg News survey. Gasoline and distillate inventories are also expected to build.
On the NYMEX, crude oil for June delivery was trading 12 cents higher at $124.35 per barrel.
Among other stocks in the news Tuesday, Fluor Corp. (FLR) shares jumped after the company reported first-quarter earnings of $1.50 per share vs. 94 cents a year ago on a 32% revenue rise. The consensus EPS view was $1.27 per share. Fluor raised its 2008 EPS guidance to $6.25-$6.55 per share. S&P reiterated its buy rating on the shares and Lazard Capital reportedly upgraded the stock to buy from hold.
Staples Inc. (SPLS) raised its hostile bid for rival Corporate Express to $2.27 billion. Corporate Express said its willing to talk to Staples about a deal.
LDK Solar Co. (LDK) shares fell after the company posted a first-quarter profit of 45 cents per share vs. 44 cents in the fourth quarter on a 21% sequential revenue rise. LDK said its gross profit margin was 27.7%, compared with 30.1% in the fourth quarter. It sees second-quarter revenue of $278 million to $288 million with wafer shipments between 136 MW to 146 MW. The company also now sees 2008 revenue of $1.08 billion to $1.18 billion and wafer shipments of 560 MW to 580 MW, with gross margin expected to be 23%-28%, weaker than earlier expectations.
Major European indexes were trading mostly higher Tuesday. In London, the FTSE 100 index was flat at 6,220.50. In Paris, the CAC 40 index rose 0.71% to 5,011.66, and Germany's DAX index gained 0.58% to trade at 7,076.77.
In Asia, Japan's Nikkei 225 advanced 1.53% to close at 13,953.73, and Hong Kong's Hang Seng index was up 1.95% at 25,552.77.
Treasury market
Treasuries were lower on Tuesday, reacting to better than expected non-headline retail sales figures and some strong earnings news. The ten-year note fell 16/32 to 100-04/32 for a yield of 3.86%, and the 30-year bond was down 21/32 to 96-24/32 for a yield of 4.58%.