Wal-Mart and Home Depot sneezed yesterday. Will the economy catch a cold?The two companies, the nation’s largest retailers and bellwethers for consumer spending, reported earnings disappointments for the second quarter and predicted an even bumpier year ahead because of higher energy costs and a sagging housing market.
The sober forecasts reverberated across Wall Street, sending the Dow Jones industrial average and the Standard & Poor’s 500-stock index down by nearly 2 percent, with the Dow dropping more than 200 points. Shares of both Wal-Mart and Home Depot fell around 5 percent.
Home Depot also said that the proposed sale of its supply business, for $11 billion, could fall through because of trouble in the credit markets, potentially forcing the retailer to shrink a $23 billion stock buyback.
Economists said the sluggish performance of the chains — Wal-Mart missed its profit forecast and Home Depot’s earnings dropped — could signal broader troubles in the economy.
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