New York, February 21, 2025 – U.S. stock markets closed in the red on Thursday as investors reacted to Walmart’s (WMT) disappointing financial outlook, growing inflation concerns, and fresh tariff uncertainties from the Federal Reserve’s evolving stance on interest rates.
Market Performance
The S&P 500 (SP500) fell 0.4% to 6,117.55, the Nasdaq Composite (COMP:IND) declined 0.5%, and the Dow Jones Industrial Average (DJI) plunged 451 points (-1%), marking its worst single-day percentage drop since early January.
Walmart’s Disappointing Guidance Sparks Retail Concerns
Retail giant Walmart (WMT) tumbled 6.5%, making it the biggest decliner on the Dow. The company projected first-quarter per-share earnings of $0.57 to $0.58, significantly below analysts’ expectations of $0.65.
Leo Nelissen from investing group iREIT on Alpha commented, “While the giant continues to do well, we see that consumers are struggling again with rebounding inflation and are more likely to use debt to fund basic necessities.”
This weakness was reflected in other retail stocks, with Costco (COST), Amazon (AMZN), and Target (TGT) also experiencing losses. The Consumer Staples Sector (XLP) fell 1%, one of seven S&P 500 sectors in the red.
Inflation and Job Data Add to Market Jitters
Investors faced additional concerns as economic data pointed to potential trouble ahead. Initial jobless claims rose more than expected, while the Philly Fed Manufacturing Index showed a sharper-than-anticipated month-over-month decline in February.
Meanwhile, inflation has been creeping up again, even without energy inflation driving the increase. Nelissen added, “I believe the odds are elevated for more consumer weakness in the months and even quarters ahead. While the S&P 500 remains heavily weighted in tech, the impact on consumer-dependent stocks could be significant.”
Treasury Yields Reflect Cautious Sentiment
The bond market signaled investor caution as the 10-year U.S. Treasury yield (US10Y) fell 3 basis points to 4.51%, while the 2-year yield (US2Y) remained steady at 4.28%.
Palantir and Cruise Stocks Suffer Sharp Declines
Defense contractor Palantir (PLTR) sank 5.3%, recovering slightly from its worst levels after a memo from Defense Secretary Pete Hegseth proposed an 8% cut to the defense budget over the next five years. Analysts at Wedbush Securities suggested that Palantir’s software capabilities might still position it for IT funding growth within the Pentagon.
The cruise industry also saw steep declines after Commerce Secretary Howard Lutnick indicated that a tax break benefiting shipping companies could be eliminated under the Trump administration. Carnival Corporation (CCL) fell 5.9%, Royal Caribbean (RCL) lost 7.5%, and Norwegian Cruise Line (NCLH) declined 4.8%.
New Tariffs on the Horizon
Markets were further unsettled by President Donald Trump’s latest trade policy announcement. Set to take effect in April, the new tariffs include a 25% levy on automobiles and similar tariffs on imported semiconductors and medications. This move has raised concerns about potential retaliatory actions from trading partners and its broader impact on corporate earnings.
As Wall Street digests these developments, investors remain watchful for further guidance from the Federal Reserve and corporate earnings reports.
