Shares of Cisco Systems slid 9.8 per cent as the company cut its full-year revenue and profit forecasts while Walmart shares dipped 8.1 per cent a day after hitting a record high
The S&P 500 and the Nasdaq managed to eke out small gains on Thursday while the Dow Jones Industrial Average closed marginally lower with pressure from tech and retail bellwethers Cisco and Walmart after disappointing forecasts.
Shares of Cisco Systems slid 9.8 per cent as the communications and networking technology company cut its full-year revenue and profit forecasts on slowing demand for its networking equipment. Also in technology, Palo Alto Networks shares dropped 5.4 per cent after its forecast late Wednesday for Q2 billings missed expectations.
Walmart shares dipped 8.1 per cent a day after hitting a record high. The retail giant said U.S. consumers were spending cautiously due to inflation, even as it raised its annual forecast for sales and profit.
This helped send the S&P 500 consumer staples index 1.2 per cent lower and weighed on retailers with Dollar General and Dollar Tree both dropping 4.2 per cent.
Also, Target dropped 0.4 per cent, giving back some gains from the previous session in which it surged 17.8 per cent after providing a bullish strong holiday-quarter outlook.
Earlier this week, Wall Street indexes had rallied steeply with data indicating cooling U.S. inflation and fuelling expectations the U.S. Fed is done raising interest rates. Also, passage this week of a stop-gap bill to prevent a government shutdown eased some nerves.
Given that Cisco and Walmart are “a backbone of their respective industries”, Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest said their weakness “calls a little bit into question the health of the consumer and maybe the health of the technology sector.”
But others noted positive counter forces in Thursday’s session, with gains in megacaps including Microsoft Corp, Apple Inc and Nvidia.
The major indexes are pretty much flat on the day, but you are still seeing a lot of strength in big-cap tech or growth. It is just a continuation of the positive narrative we have seen in the market recently, said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.
Especially, Ghriskey cited investor relief that the Fed appears to be done with its rate hiking cycle.