This morning one hour before the NYSE stock market opens, DOW-30 futures are down over 100 points after Wal-Mart Inc. (NYSE: WMT) announced earnings that missed analyst predictions and revealed a coming slow down in sales growth. Shares are down roughly 5% in pre-market trading action.
The company revealed that it actually lost money in the last quarter. It lost about $2 billion in the last quarter for 74 cents a share. Although its e-commerce operations grew by 69%, they still generated a loss, failing to turn a profit. The company said that it expects its sales growth to moderate through 2021 thanks to the sluggish economy. However, it announced a $20 billion share buyback program in order to appease Wall Street analysts and keep the stock at elevated levels. The stock has done well in the past year as you can see from this chart.
The stock is poised to open around $139 a share, which would put it between its 150 and 200-day moving averages. From a stock trading perspective, it will have to stabilize above the latter level for several weeks to work off the damage done today. It is hoped that share buyback programs, even if they mean creating more debt for the company on its balance sheet, can play a role in that, but there are other sectors in the stock market now showing more strength that look like more compelling buys, such as shipping stocks, material stocks, and energy stocks. Congressional hearings on Gamestop are likely to dominate today financial news. For more of my thoughts on the market check out my pre-market post here.