Even Recession Proof Industries Not Immune
The consumer staples sector was the worst performing on Wall Street yesterday after a profit warning from Wal-Mart heightened concerns that the year-long recession could hurt even those groups previously regarded as relatively immune.
Shares in the world’s biggest retailer were among the few to enjoy a double-digit increase last year, up 18 per cent as investors hoped the group could continue to find strong growth from costconscious consumers eking out cheaper alternatives.
But the shares were the biggest losers on the Dow Jones Industrial Average yesterday, down 7.5 per cent to $51.38 after the group cut its fourth-quarter earnings forecast. That wiped out all of their growth since late November.
McDonald’s - the only other Dow stock to find positive territory in 2008 - fell 1.2 per cent to $60.52, while cosmetics group Avon Products shed 4.6 per cent to $23.10.
Wal-Mart’s profit warning came after disappointing December sales, one of several downbeat retail figures disclosed yesterday.
However, hopes of quick approval in Washington of Barack Obama’s economic stimulus package helped the major indices finish mixed following sharp declines in the previous session.
The S&P 500 closed up 0.3 per cent at 909.73 points, the Dow down 0.3 per cent at 8,742.46 and the Nasdaq Composite Index up 1.1 per cent at 1,617.01.
The material sector was one of the better performing. Alcoa , which came under selling pressure earlier in the week after disclosing plans for the third production cut in as many months, recovered 4.3 per cent to $11.36 ahead of fourth quarter results due on Monday.
