New York
CNN
—
US stocks fell Thursday after the world’s largest retailer warned that 2025 would be a rollercoaster ride and said it expected sales to slow this year amid fears that consumers are tapped out.
The sour forecast from Walmart (WMT) dragged down the Dow by more than 600 points, or 1.5%, and Walmart stock dropped 7%. Stocks fell on investors’ fears that consumer spending, which makes up two-thirds of the economy, would slow as shoppers pull back in the face of even higher prices. The S&P 500 and Nasdaq Composite were both 0.9% lower.
Walmart acknowledged “uncertainties related to consumer behavior and global economic and geopolitical conditions,” Chief Financial Officer John David Rainey said Thursday.
Higher inflation and years of elevated interest rates continue to weigh on American shoppers, a picture that becomes more complicated if President Donald Trump enacts the slew of tariffs he has promised.
In the first month of his new presidential term, Trump introduced a 10% across-board-tariff on goods coming from China and a 25% tariff on all steel and aluminum imports. He has also pledged to impose tariffs on Mexico and Canada starting in March and directed his economic team to study “reciprocal tariffs” on all trading partners.
While Walmart’s sheer size and scale somewhat insulate the company from tariffs and any ensuing price pressures, its projected slowdown is a signal that 2025 will be rough for smaller retailers and the industry as a whole.
Retail sales plunged by 0.9% last month as shoppers reined in their spending across multiple categories, the Commerce Department reported last week. That was sharply down sharply from December’s total and well below economists’ expectations of a 0.4% decline. The figures are adjusted for seasonal swings but not inflation.
Meanwhile, Americans’ inflation expectations for the year ahead surged this month to the highest level since November 2023, according to the University of Michigan’s latest consumer survey. And consumer sentiment plunged.
This is a developing story and will be updated.