Markets finished in the red on Monday following a decline in the shares of Walmart. A spike in yield on the 10-year U.S. Treasury note also increased fears related to a spike in inflation and weighed heavily on the broader markets. Consequently, the Dow and the S&P 500 snapped their six-day streak of gains.
The Dow Jones Industrial Average (DJI) decreased 1%, to close at 24,964.75. However, the S&P 500 fell 0.6% to close at 2,716.26. The tech-laden Nasdaq Composite Index closed at 7,234.31, losing about 0.1%. The fear-gauge CBOE Volatility Index (VIX) increased 7.7% to close at 20.95.
A total of around 6.79 billion shares were traded on Monday, lower than the last 20-session average of 8.48 billion shares. Decliners outnumbered advancers on the NYSE by a 1.98-to-1 ratio. On Nasdaq, a 2.05-to-1 ratio favored declining issues.
Walmart Weighs on the Dow
Shares of Walmart Inc. WMT declined 10.2% on Monday after posting fourth-quarter fiscal 2018 results, wherein both earnings and revenues improved year over year and the latter also exceeded the Zacks Consensus Estimate. However, Walmart crushed its nine-quarter long trend of posting positive earnings surprise in the quarter. Also, rate of e-commerce sales growth declined sequentially in the quarter. This was Walmart's biggest percentage decline in a single day since January 1988.
Such an event weighed on the broader market and Dow in particular shed 254 points to finish in the red, ending its six-day streak of gains. Moreover, the blue-chip index also fell below its 50-day moving average.
How Did other Major Benchmarks Perform?
Walmart was also the biggest drag on the S&P 500.The S&P 500 declined 16 points to also snap six-day streak of gains. Of the 11 major segments of the S&P 500, only one ended in positive territory. While the laggards were led by theconsumer staples sector, tech sector managed only meager gains. The Consumer Staples Select Sector SPDR ETF (XLP) declined 2.3%, whereas the Technology Select Sector SPDR ETF (XLK) notched up only 0.1% on Monday.
This marked the S&P 500's first close in negative territory in the last seven sessions. Further, the broader index broke below its 50-day moving average. However, losses for Target TGT , Kroger KR and Kraft Heinz KHC also weighed on the S&P 500. Shares of Target, Kroger and Kraft Heinz declined 3%, 4.2% and 3%, respectively.
Meanwhile, Nasdaq 5.2 points to also finish in the red. Gains for the tech-laden index were rather broad-based. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
Rise in Bond Yields Weigh on Equities
After hitting its highest levels since 2014 last week, the yield on benchmark 10-year U.S. Treasury note surged to 2.9% on Monday. Further, the short-term two-year yield lingered around a nine-year high. Such a spike in interest rates stole the sheen off equity stocks and led to broad based losses for the equity markets.
Moreover, a surge in interest rates also instilled fresh inflation-related worries among investors. A surge in interest rate is seen as an indication of a possible rate hike by the Fed as benchmark interest rate lead to a spike in inflation. Such an event dampened investors' sentiments.
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