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Wal-Mart's Shares Sag Amid Market Rebound

Tuesday, 11 May 2010 08:06 AM

 

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Wal-Mart Stores Inc.'s shares were one of few to fall Monday as the broader market surged on optimism over Europe's $1 trillion plan to head off a debt crisis.

The world's largest retailer's shares slipped 10 cents to $52.30 in afternoon trading Monday.

Meanwhile, the Dow Jones industrial average rose about 345 points in afternoon trading but pulled off its highs of the day. The Dow and broader indexes all climbed more than 3 percent. Gains in several European markets topped 9 percent.

Analyst Brian Sozzi with Wall Street Strategies noted several reasons for Wal-Mart's stock move.

For one, Wal-Mart's shares dipped only slightly when the rest of the market plunged Friday as investors sought the safest havens. Wal-Mart's shares closed at $52.40 Friday, down only 2 percent from the beginning of the week. In contrast, department store operator Macy's Inc. closed at $21.94 on Friday, down more than 7 percent in the same period.

Sozzi also noted that a news report published Friday could also be creating some concern among investors.

The Financial Times reported Friday that Wal-Mart plans to increase sales by $100 billion in the U.S. by opening urban stores. The article quoted Eduardo Castro-Wright, Wal-Mart's head of U.S. operations. Sozzi said that would require "sizeable" capital investment, marking a shift in strategy for the retailer, which has been cutting back on capital expenditures.

Sozzi noted even though Wal-Mart stores in urban markets would be smaller than those in more rural areas, it's more costly to build because of pricier real estate.

Wal-Mart plans to report its first-quarter earnings May 18.

© Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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