Stock Market News For Feb 21, 2018

Markets finished in the red on Monday following a decline in the shares of Walmart. A spike in yield on the 10-year U.S. Treasury note also increased fears related to a spike in inflation and weighed heavily on the broader markets. Consequently, the Dow and the S&P 500 snapped their six-day streak of gains.

The Dow Jones Industrial Average (DJI) decreased 1%, to close at 24,964.75. However, the S&P 500 fell 0.6% to close at 2,716.26. The tech-laden Nasdaq Composite Index closed at 7,234.31, losing about 0.1%. The fear-gauge CBOE Volatility Index (VIX) increased 7.7% to close at 20.95.

A total of around 6.79 billion shares were traded on Monday, lower than the last 20-session average of 8.48 billion shares. Decliners outnumbered advancers on the NYSE by a 1.98-to-1 ratio. On Nasdaq, a 2.05-to-1 ratio favored declining issues.

Walmart Weighs on the Dow

Shares of Walmart Inc. (NYSE:WMT) declined 10.2% on Monday after posting fourth-quarter fiscal 2018 results, wherein both earnings and revenues improved year over year and the latter also exceeded the Zacks Consensus Estimate. However, Walmart crushed its nine-quarter long trend of posting positive earnings surprise in the quarter. Also, rate of e-commerce sales growth declined sequentially in the quarter. This was Walmart’s biggest percentage decline in a single day since January 1988.

Such an event weighed on the broader market and Dow in particular shed 254 points to finish in the red, ending its six-day streak of gains. Moreover, the blue-chip index also fell below its 50-day moving average.

How Did other Major Benchmarks Perform?

Walmart was also the biggest drag on the S&P 500.The S&P 500 declined 16 points to also snap six-day streak of gains. Of the 11 major segments of the S&P 500, only one ended in positive territory. While the laggards were led by theconsumer staples sector, tech sector managed only meager gains. The Consumer Staples Select Sector SPDR ETF (NYSE:XLP) declined 2.3%, whereas the Technology Select Sector SPDR ETF (NYSE:XLK) notched up only 0.1% on Monday.

This marked the S&P 500’s first close in negative territory in the last seven sessions. Further, the broader index broke below its 50-day moving average. However, losses for Target (NYSE:TGT) , Kroger (NYSE:KR) and Kraft Heinz (NASDAQ:KHC) also weighed on the S&P 500. Shares of Target, Kroger and Kraft Heinz declined 3%, 4.2% and 3%, respectively.

Meanwhile, Nasdaq 5.2 points to also finish in the red. Gains for the tech-laden index were rather broad-based. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Rise in Bond Yields Weigh on Equities

After hitting its highest levels since 2014 last week, the yield on benchmark 10-year U.S. Treasury note surged to 2.9% on Monday. Further, the short-term two-year yield lingered around a nine-year high. Such a spike in interest rates stole the sheen off equity stocks and led to broad based losses for the equity markets.

Moreover, a surge in interest rates also instilled fresh inflation-related worries among investors. A surge in interest rate is seen as an indication of a possible rate hike by the Fed as benchmark interest rate lead to a spike in inflation. Such an event dampened investors’ sentiments.

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