Dow Futures Slip, Walmart Tanks After Inflation Warning, Google and Microsoft Earnings Loom—and What Else Is Happening in the Stock Market Today

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Inflation and recession concerns have weighed heavily on investors.

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Stocks retreated on Tuesday, as worries about inflation and recession rose to the fore following a grim corporate update from Walmart , with investors hotly anticipating earnings in the day ahead from tech giants Alphabet and Microsoft .

Futures for the Dow Jones Industrial Average slipped 120 points, or 0.4%, after the index gained 90 points on Monday to close at 31,990. S&P 500 futures signaled a start 0.3% into the red with the tech-stock-heavy Nasdaq poised to slide 0.4%.

Overseas, the pan-European Stoxx 600 hovered around flat and Tokyo’s Nikkei 225 lost 0.2%.

Investors continue to focus on concerns around inflation and how the Federal Reserve’s attempt to tame rising prices with higher interest rates—denting economic demand—risks spurring a recession. The Fed is starting its two-day meeting on monetary policy Tuesday, with a decision coming Wednesday on what is expected to be another 75 basis-point rate hike. In June, the central bank raised rates by 75 basis points, or three-quarters of a percentage point, for the first time since 1994.

The inflation picture darkened with a surprise update from Walmart (ticker: WMT) late Monday. The retail giant slashed its second-quarter and 2022 profit guidance, citing inflation, which is boosting overall sales but pinching customer spending on anything but essentials. Walmart’s downbeat news and an associated tumble in the stock price is a key force weighing down U.S. stocks heading into Tuesday, said Jim Reid, a strategist at Deutsche Bank.

“Recession fears mount in the U.S. after Walmart’s results,” noted Jeffrey Halley, an analyst at broker Oanda. “The Walmart results also saw Amazon and Target stocks get a beating by association.”

Corporate earnings will continue to be in the spotlight Tuesday with two Big Tech companies kicking off a wave of results this week. Google parent Alphabet (GOOGL) and Microsoft (MSFT) report earnings after the close, with Facebook parent Meta Platforms (META) following Wednesday before Apple (AAPL) and Amazon (AMZN) on Thursday.

As some of the largest U.S. companies, these five groups represent some $7.5 trillion in market capitalization, so investors’ reaction to their earnings—and any associated stock-price swing—has the potential to drag around the major indexes.

“If these titans report much better than expected quarterly results, this could support U.S. equity markets, especially the Nasdaq-100 which is down almost 25% year-to-date,” said Lukman Otunuga, an analyst at broker FXTM.

Here are two stocks on the move Tuesday:

Walmart (WMT) tumbled 9% in U.S. premarket trading, after revealing guidance for adjusted earnings per share to fall between 8% and 9% for the second quarter and between 11% and 13% for the full year. The company was calling for EPS to decrease just 1% for the fiscal year when it last reported results, in May.

Alibaba (BABA) gained 5% in premarket trading, after the New York-listed Chinese tech giant said its board had authorized management to apply for a primary listing in Hong Kong. The move, which is expected to complete by the end of the year, would leave Alibaba as a dual-primary-listed company in New York and Hong Kong.

Write to Jack Denton at jack.denton@dowjones.com