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(Reuters) -Wall Street’s main indexes were down slightly on Thursday, with pressure from Cisco and Walmart (NYSE:WMT) after disappointing forecasts, while a drop in Treasury yields cushioned some megacap stocks.
Shares of Cisco Systems (NASDAQ:CSCO) shed 11.6% as the communications and networking technology company cut its full-year revenue and profit forecasts on slowing demand for its networking equipment. Also in technology, Palo Alto Networks (NASDAQ:PANW) shares fell after its forecast late Wednesday for second-quarter billings that missed expectations.
Walmart dropped 8.1% the day after touching a record high. The retail giant said U.S. consumers were spending cautiously because of inflation, even as it raised its annual forecast for sales and profit.
The broader S&P 500 consumer staples index fell 1.3%, and Walmart’s warning weighed on other retailers including Dollar General (NYSE:DG), down 3.5%, and Dollar Tree (NASDAQ:DLTR), down 5.2%.
Also, Target , down 0.8%, was giving back some gains from the previous session when it soared 17.8% after providing a bullish strong holiday-quarter outlook.
Wall Street indexes had advanced in the four prior sessions, with data signaling cooling U.S. inflation and fueling hopes the U.S. Federal Reserve is done hiking interest rates. Also, passage this week of a stop-gap bill to avert a government shutdown eased some nerves.
After days of gains, investors took the opportunity to take a step back, according to Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut.
“Immediate weakness is profit taking and a drawdown based on Cisco systems, Walmart and Palo Alto,” said Pavlik.
Given that Cisco and Walmart are “a backbone of their respective industries”, Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest said their weakness “calls a little bit into question the health of the consumer and maybe the health of the technology sector.”
The Dow Jones Industrial Average fell 148.1 points, or 0.42%, to 34,843.11, the S&P 500 lost 4.27 points, or 0.09%, to 4,498.61 and the Nasdaq Composite dropped 16.61 points, or 0.12%, to 14,087.22.
Energy led declines among the 11 major S&P sectors, down 2.5% after hitting a four-month low as crude prices dropped more than 4%. [O/R] Utilities, up 0.9%, was the sector with the strongest advance.
Keeping declines in check however, U.S. Treasury yields moved lower after a Labor Department’s report on Thursday showed weekly jobless claims had risen more than expected, cementing bets that the Fed will not need to raise rates further.
While money markets have fully priced in a probability that the Fed will hold rates steady in December, they see about a 62% chance of a rate cut in May of at least 25 basis points, according to CME Group’s (NASDAQ:CME) FedWatch tool.
Palo Alto Networks was down 5.8% after the cybersecurity company’s billings warning.
Macy’s (NYSE:M) shares climbed 4.6% as the department store operator’s quarterly sales beat analysts’ estimates.
Declining issues outnumbered advancing ones on the NYSE by a 1.49-to-1 ratio; on Nasdaq, a 1.90-to-1 ratio favored decliners.
The S&P 500 posted 15 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 33 new highs and 108 new lows.
