Stock futures fall after Walmart cuts forecast, says inflation hit consumer spending

U.S. stock futures fell on Monday night after Walmart cut its profit forecast, sending retail stocks down after hours.

Dow Jones Industrial Average futures fell 133 points, or 0.4%. S&P 500 and Nasdaq 100 futures fell 0.3% and 0.4%, respectively.

A late Monday announcement by Walmart, which cut its quarterly and full-year profit estimates due to rising food inflation, spooked investors who were weighing the implications for other retail stocks. The major retailer said higher prices are prompting consumers to cut back on general merchandise spending, particularly in clothing.

Walmart plunged nearly 9% in extended trade, dragging other retailers down with it. Target fell 5% and Amazon fell 4%. Macy̵[ads1]7;s and Dollar General each fell 3%, while Costco fell 2%.

“Obviously they’ve got the wrong stuff and they’re going to have to sell it more aggressively to clear it, which looks like it’s going to take a pretty dramatic hit as a result of that,” Jeremy Bryan, senior portfolio manager at Gradient Investments said during CNBC’s “Closing Bell: Overtime.”

“The question is, how does this relate to the rest of the discretionary space?” Bryan added.

Stocks during Monday’s session traded in a narrow range, with the S&P 500 gaining 0.1%. The Dow Jones Industrial Average rose 90.75 points, or 0.3%. The technology-heavy Nasdaq Composite slowed and fell 0.4%. All the major averages are on track for their best month of the year.

Traders are bracing for an onslaught of mega-cap tech earnings and economic data this week, as well as the outcome of the Federal Reserve meeting, which will help Wall Street manage expectations for the rest of the year.

“I think it’s going to be a bifurcated market,” VantageRock’s Avery Sheffield said during CNBC’s “Closing Bell: Overtime.” “I think the bottom may be in certain stocks, but nowhere in others. So this could actually be one of the most dynamic earnings seasons we’ve seen in a long time.”

On Tuesday, the Federal Reserve begins its two-day policy meeting. Traders expect an increase of three quarters of a percentage point.

Coca-Cola, McDonald’s and General Motors are set to report earnings on Tuesday before the bell. Alphabet, Microsoft, Chipotle Mexican Grill, UPS and Enphase Energy will report after the hour.

On the economic front, traders expect the latest reading of the Case-Shiller Home Price Index at 9 a.m. ET. The consumer confidence report and new home sales data are due at 10 a.m. ET.

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