Wal-Mart Stores Inc. slumped 2% for the biggest drop in the Dow Jones Industrial Average. The world’s largest retailer is cutting orders it places with suppliers this quarter and next to address rising inventories the company flagged in last month’s earnings report. Last week, an ordering manager at the company’s Bentonville, Arkansas, headquarters described the pullback in an e-mail to a supplier, who said others got similar messages.
“We are looking at reducing inventory for Q3 and Q4,” said the Sept. 17 e-mail, which was reviewed by Bloomberg News.
Among other stocks moving today, Stryker Corp. slipped 2.3 after agreeing to buy Mako Surgical Corp. for $1.65 billion. Carnival Corp. retreated 5.2% as analysts cut their recommendations after the world’s largest cruise-ship operator forecast a possible quarterly loss. Noble Corp. added 3% after saying it plans to spin off about half its fleet.
J.C. Penney Co., the retailer trying to reverse $1.6 billion of losses in the past year, sank 13% after Goldman Sachs Group Inc. said its liquidity will be strained this quarter.
The S&P 500 has rallied almost 6% in the third quarter while Treasuries retreated 0.1% through yesterday, according to data compiled by Bloomberg and Bank of America Corp. The divergence will cause some funds to sell stocks and buy bonds to rebalance asset allocations. UBS AG strategist Boris Rjavinski projects “significant” outflows from U.S. equities into Treasuries, with as much as $41 billion in stocks being sold and up to $22 billion of fixed-income investments purchased by pension funds.
Fixed-income securities are poised to deliver losses “for the next couple of years,” according to BlackRock Inc., the world’s biggest money manager.
“Overall returns of the market will continue to be negative as monetary policy shifts,” Scott Thiel, deputy chief investment officer for fundamental fixed income, said at a media briefing in London. “The direction of interest rates will be higher over the next couple of years but the reality is that that’s not in every single asset class, and not in every single sector, and in particular, not in every single global market.”