The three major indices of the U.S. New York stock market all closed lower on the 20th (local time). Investor sentiment cooled as doubts about the future economic outlook arose following Walmart's downward revision of its earnings forecast.
On this day in the New York stock market, the Dow Jones Industrial Average (Dow), which focuses on blue-chip stocks, closed at 44,176.65, down 450.94 points (1.01%) from the previous trading day. The S&P 500 index, centered on large-cap stocks that had set new highs for two consecutive days, fell 26.63 points (0.43%) to close at 6,117.52. The tech-heavy Nasdaq index slid 93.89 points (0.47%) to close at 19,962.36, dropping below the 20,000 mark.
Walmart, known as the "consumer barometer," dampened investor sentiment by announcing a disappointing annual earnings forecast. Although the company reported results exceeding its 2025 fiscal year Q4 outlook, it projected a sales growth rate of 3-4% for the 2026 fiscal year, falling short of expectations. Concerns about the future economic outlook, including the possibility of a slowdown in consumer spending?which accounts for two-thirds of the U.S. economy?led to a spread of selling sentiment.
Tom Fitzpatrick, Managing Director at R.J. O'Brien & Associates, analyzed, "If Walmart provides a poor earnings outlook, it should be taken seriously," adding, "This may suggest that ordinary consumers have run out of money to spend."
U.S. employment data released that morning showed continued strength. According to the U.S. Department of Labor, new unemployment claims for the week of February 9-15 rose by 5,000 to 219,000, compared to the revised figure of 214,000 the previous week. Although this was 4,000 higher than the market estimate of 215,000, it remains at a level similar to that before the COVID-19 pandemic, indicating sustained robust employment.
The market is also closely watching U.S. President Donald Trump's tariff policies and the Federal Reserve's (Fed) interest rate path. The previous day, President Trump said that the announcement of 25% tariffs on automobiles, semiconductors, and pharmaceuticals, originally scheduled for April 2, could be moved up to March. He also mentioned tariffs on lumber and forestry-related imports, stating the tariff rate would be "probably 25%." So far, the market has been observing President Trump's tariff policies without significant disruption.
Andrew Craig, Co-Head of the Investment Insight Center at BNP Paribas Asset Management, said regarding President Trump's policies, "We believe the U.S. could potentially trigger a supply shock that would slow U.S. growth and the pace of disinflation (slowing inflation)," adding, "We assess that the Fed is unlikely to ease (cut) policy rates under a stagflation (economic stagnation with inflation) scenario."
Fed officials continued their public remarks on this day. Austan Goolsbee, President of the Federal Reserve Bank of Chicago, said at an event in Chicago, "The Personal Consumption Expenditures (PCE) price index is not good, but it won't be as alarming as the Consumer Price Index (CPI) figures." The January CPI rose 3% year-over-year, exceeding both the previous month's figure and forecasts (each 2.9%), raising concerns about a rebound in inflation. However, President Goolsbee noted that uncertainties surrounding the economy and President Trump's tariff policies could affect future inflation.
The minutes of the January Federal Open Market Committee (FOMC) meeting, released the previous day, suggested that the Fed would hold off on cutting interest rates until inflation declines further. Currently, the market is pricing in about a 50% chance that the Fed will either keep rates steady throughout the year or cut them only once.
U.S. Treasury yields are falling, mainly in long-term bonds. The 10-year U.S. Treasury yield, a global bond yield benchmark, dropped 2 basis points (1bp = 0.01 percentage points) from the previous trading day to 4.5%, while the 2-year Treasury yield, sensitive to monetary policy, remained around 4.27%. Comments by U.S. Treasury Secretary Scott Vestin in an interview with Bloomberg are contributing to the decline in the 10-year yield. Secretary Vestin said that increasing the proportion of long-term bonds in debt issuance is still a distant prospect, and that government restructuring, deregulation, tax cuts, and expanded U.S. energy supply could lay the foundation for lower inflation and thus lower long-term bond yields.
By individual stocks, Walmart fell 6.53% following its disappointing earnings forecast. Costco dropped 2.61%. Video game platform Vimeo declined 18.73%, and used car trading platform Carvana fell 12.1%. Both companies experienced continued selling pressure after releasing earnings below expectations.
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