Wall Street's main indexes fell Thursday midday, with the S&P 500 off record highs as a sell-off in heavyweight retailer Walmart and tech firm Palantir hit investor sentiment, while the market assessed latest tariff threats from U.S. President Donald Trump.
At 12:31 p.m. EST, the Dow Jones Industrial Average fell 555.10 points, or 1.24, the S&P 500 lost 40.50 points or 0.66%, and the Nasdaq Composite lost 138.38 points or 0.69%.
Walmart slid 6% after the world's largest retailer forecast sales and profit for the fiscal year ending January 2026 below analysts' estimates, as it anticipates inflation-weary consumers to pull back after several quarters of solid growth.
"(Walmart's results) show that consumers are tightening their wallets. It makes people think this a delayed reaction to all the Fed rate hikes that have been going on over the past year," said Michael Matousek, head trader at U.S. Global Investors.
The company's forecast dragged down other major retailers such as Target, Costco Wholesale and Dollar Tree, which fell between 1.4% and 5.6%.
Palantir Technologies, which provides governments with services such as software that visualizes army positions, shed 9.7% after the Pentagon said on Wednesday it was looking at potential budget cuts for the fiscal year 2026.
Matousek also said that Palantir's declines, coupled with Walmart's, are "inducing people to sell out of fear."
Most megacap and growth stocks trended lower, with Amazon.com and Tesla down more than 1% each.
The market is also reacting to Trump's Wednesday announcement of fresh tariffs over the next month or sooner, adding lumber and forest products to previously announced plans involving duties on imported cars, semiconductors and pharmaceuticals.
Since returning to office four weeks ago, Trump has imposed an additional 10% tariff on all imports from China. He also announced, and then delayed for a month 25% tariffs on goods from Mexico and non-energy imports from Canada.
Last week, he unveiled plans to slap reciprocal tariffs on all countries that have tariffs on U.S. goods.
Separately, minutes from the U.S. Federal Reserve's January policy meeting showed on Wednesday that Trump's initial policy proposals raised inflationary concerns at the central bank.
On Thursday, data showed that the number of Americans filing new applications for unemployment benefits increased moderately last week, suggesting that the labor market remained on solid ground.
Eight of the S&P 500's 11 sectors traded lower, with financials leading declines with a 2% fall.
U.S.-listed shares of Alibaba Group advanced 7.4% after the Chinese e-commerce firm topped expectations for third-quarter revenue.
Hasbro jumped 11.2% after the toymaker beat quarterly profit and revenue estimates, while Baxter International gained 7.9% after the medical device maker forecast 2025 profit above estimates.
Declining issues outnumbered advancers by a 1.69-to-1 ratio on the NYSE, and by a 2.18-to-1 ratio on the Nasdaq.
The S&P 500 posted eight new 52-week highs and three new lows, while the Nasdaq Composite recorded 47 new highs and 105 new lows.