Retail stocks fell today and shares of Wal-Mart Stores Inc. weighed on the Dow Jones Industrial Average after J.P. Morgan downgraded the discounter’s stock to neutral from overweight.
J.P. Morgan analyst Christopher Horvers said Wal-Mart improved last year, having added more stockkeeping units to its stores and “successfully returning to price/assortment leadership after wandering off the path.”
But the analyst noted, “With the low-hanging fruit behind them and considering the company’s massive size and the pressures from the payroll tax increase, we believe [comparable-store sales] have peaked/will plateau following three straight years of acceleration.” Shares of Wal-Mart declined 1.2 percent to $69.63, weighing on the Dow, which fell 0.9 percent, or 129.71, to 13,880.08.
The S&P 500 Retailing Industry Group fell 1.2 percent, or 8.36 points, to 691.92.
The day’s decliners included The Jones Group Inc., down 5 percent to $11.54; Guess Inc., 4.8 percent to $25.95; The Bon-Ton Stores Inc., 4.4 percent to $12.53; Tiffany & Co., 4 percent to $62.17, and J.C. Penney Co. Inc., 2.7 percent to $19.34.
Both retail stocks and market overall are still near their all-time highs.
In Europe, markets took a tumble, falling to their lowest level in three months amid political drama in Spain and Italy and more general concerns over the euro zone.
The FTSE MIB led the way, dropping 4.5 percent to 16,539.00, followed by the CAC 40 in Paris, which retreated three percent to 3,659.91. The DAX in Frankfurt fell 2.5 percent to 7,638.23 and the FTSE 100 in London contracted 1.6 percent to 6,246.84.
The euro was trading at $1.36 against the dollar, the pound was valued at $1.57 and the Swiss franc fetched $1.10.
Retail and luxury stocks were mostly down, with those losing the most ground including LVMH Moët Hennessy Louis Vuitton, down 4.2 percent to 134 euros; L’Oréal, 3 percent to 108.60 euros; Safilo, 2.8 percent to 7.93 euros, and PPR, 1.5 percent to 161.05 euros.
Going against the predominant downward trend was The Swatch Group, which rose 4.3 percent to 92.95 Swiss francs, after reporting that full-year 2012 net profits jumped 26 percent, and that 2013 would bring more growth.