Wal-Mart Shakes Wall Street

On Wall Street on Friday, for the fourth consecutive day, stock indices remained almost unchanged as there are not many reasons to buy stocks and continue the rise in their prices.

The Dow Jones strengthened by 11 points, or 0.08 percent, to 13,984 points, while the S&P 500 rose by 0.02 percent, to 1,521 points, and the Nasdaq index by 0.05 percent, to 3,200 points. Among the biggest losers, with a price drop of 2.1 percent, was Wal-Mart’s stock yesterday, following news that sales at the largest U.S. retail chain were very weak at the beginning of February.

– When bad news comes from such a large retail chain, the entire market can fall, especially on a Friday afternoon. However, I believe this news is not an indication of any significant macro problem in the retail sector, says Mike Shea, an analyst at Direct Access Partners.

The market has lacked direction all week, so not a single day did the S&P 500 index record a movement greater than 0.2 percent. This is a consequence of the lack of significant news that could trigger the market, as well as investor caution since stock prices are at their highest levels in over five years.

Investors are also cautious because negotiations between Republicans and Democrats in Washington regarding budget cuts are about to begin.

At the beginning of the year, an agreement was reached in Congress to increase taxes, thus avoiding the ‘fiscal cliff’, automatic budget cuts, and tax increases.

However, this only resolved the issue of tax increases, while if Democrats and Republicans do not reach an agreement, automatic budget cuts would take effect from March 1.

Nevertheless, market tension is not as high as during the negotiations over the ‘fiscal cliff’, as automatic budget cuts would not harm the economy as much as the overall effect of the ‘cliff’.

Thanks to avoiding the ‘fiscal cliff’, the S&P 500 has risen by 6.6 percent since the beginning of the year. However, at the level of 1,525 points, it encountered strong resistance.

Despite this, investors are not opting for profit-taking sales as they hope for continued stock price growth.

In addition to good quarterly business results from companies and banks, the market is also supported by corporate acquisitions. Since the beginning of the year, the value of announced acquisitions has reached $158 billion, indicating that company management assesses valuations as acceptable for acquisitions and expects an improvement in the economic situation.

Throughout this week, the Dow Jones and Nasdaq indices weakened by 0.1 percent, while the S&P 500 strengthened by the same amount, marking the seventh consecutive week of growth.

European markets also traded cautiously yesterday. The London FTSE index strengthened by 0.01 percent, to 6,328 points, while the Frankfurt DAX weakened by 0.49 percent, to 7,593 points, and the Paris CAC by 0.25 percent, to 3,660 points.