Stocks Slide as Financials Struggle—Investors Await Earnings Reports and Economic Data

Walmart tumbles on weak outlook despite earnings beat, and the Nvidia report looms large

• Stocks have declined amid sector weakness, with financials leading losses while energy emerged as the top performer.
• Walmart dropped despite beating earnings, as a weak outlook raised concern for retailing.
• Investors are awaiting the Nvidia earnings announcement and the personal consumption expenditures (PCE) report—both could influence the market and inflation expectations.

Stocks experienced a decline yesterday, with the S&P 500 and Nasdaq Composite both falling just under 0.5%. The Russell 2000 and Dow Jones Industrial Average recorded steeper losses, each dropping 1%.

Of the 11 sectors in the S&P, seven ended the day lower. Financials suffered the most, declining 1.5%, while energy stood out as the top-performing sector, gaining nearly 1%.

One of the worst-performing stocks of the day was Walmart (WMT). Despite exceeding expectations on both revenue and earnings, the retail giant issued a lackluster outlook for the year, leading to a decline in its stock price.

Earnings reports on tap

The retail earnings season is just beginning, with reports from Target (TGT)and Best Buy (BBY) still a couple of weeks away. However, next week will bring results from Home Depot(HD) and Lowe’s (LOW), among other major companies that could influence market sentiment.

Among financial stocks, JPMorgan (JPM) and Goldman Sachs GS) saw notable declines, with each falling around 4%. No clear catalyst was driving the selloff in these names.

Meanwhile, shares of Palantir (PLTR) continued their downward trend, slipping another 15% over the past two days. This decline may be tied to concern about potential reductions in defense spending under the Trump administration, which would affect companies that rely on government contracts.

Uncertainty prevails in the markets

Overall, this week has felt like a period of uncertainty for the markets, with stocks treading water as investors await clearer direction. The economic calendar has been relatively quiet, and while earnings season is ongoing, there have not been many blockbuster reports to shift market sentiment.

That dynamic is set to change next week, with key earnings and economic data expected. One of the most highly anticipated reports will come from Nvidia (NVDA), which is scheduled to release its earnings Wednesday after the market closes.

So far this earnings season, companies that have heavily invested in artificial intelligence have struggled to demonstrate how those investments translate into revenue. As a result, many of these firms have seen their stock prices decline after reporting.

However, given Nvidia’s dominant position in AI hardware, it could stand to benefit from this surge in spending. The weight of market expectations will be high, and the outcome of this report could influence broader market trends.

Eyes on economic reports

Beyond corporate earnings, economic data will also take center stage. Reports on housing and durable goods are due, but the most critical release will be next Friday’s personal consumption expenditures (PCE) report. Given the recent hotter-than-expected consumer price index, investors will closely watch this data for clues about inflation trends.

With the next Federal Reserve meeting not until March 19 and no expected changes to interest rates, any surprises in the inflation data could impact market volatility.

Today’s market conditions are expected to remain consistent with the rest of the week. The expiration of options may introduce some volatility, but given the low trading volume, major moves appear unlikely. However, any unexpected developments from Washington could change the market’s trajectory.

In the meantime, long-term investors are advised to stay focused on their financial plans and avoid reacting to short-term fluctuations.

JJ Kinahan is CEO of IG North America—which includes tastylive, tastytrade and IG's FX Business. Kinahan traded for 21 years at the Chicago Board Options Exchange. He serves on the CBOE Advisory Board and the SIFMA Options Committee. @thejjkinahan

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