Wal-Mart Leads the Dow Lower

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

Stocks are sinking on the day, and the Dow Jones Industrial Average (DJINDICES: ^DJI  ) has weathered a tough afternoon so far. As of 2:15 p.m. EDT, the Dow has recorded losses of around 45 points, with most member stocks in the red. Wal-Mart's (NYSE: WMT  ) leading the index lower in a tough day spurred by a poor inventory report. Let's catch up on what you need to know.

Wal-Mart's inventory battle
Shares of Wal-Mart haven't pleased investors today, falling about 1.5% to lead the Dow lower. A report from Bloomberg got the ball rolling, as an email revealed by the news service claimed that the retailer is looking to pare down orders in 2013's final quarters in order to combat higher-than-expected inventory levels.

Wal-Mart has come back in a response to CNBC, saying that the firm is managing inventory category-by-category and that an across-the-board inventory slash isn't in the works, but today's drop shows just how volatile this stock can be -- and why day-to-day drops and gains can be misleading for investors. Whether or not inventory's a problem at Wal-Mart, one thing investors should keep an eye on is whether or not Wal-Mart's earnings outlook cut in the second quarter comes back to haunt this firm late in the year.

The retailer's earnings jumped above analyst projections in Q2, but the firm cut its full-year earnings outlook anyway, citing poor economic conditions that could hinder spending at the end of the year. The holiday season is the sales bonanza for the retail sector, so the company will need to stay away from repeating its first-quarter miss if it wants its shares to finish strongly for the year. The volatile consumer market has hurt the stock this year, with shares up only around 9% year-to-date, far below the Dow's gains.

JPMorgan's (NYSE: JPM  ) a lone bright spot on the Dow today, with shares up 2.3%. The big bank reportedly offered the Department of Justice $3 billion to settle various lawsuits and government investigations regarding the company's mortgage-backed securities. While the government has supposedly rejected that number, talks are still ongoing between the two parties as federal and state prosecutors have moved toward suing the Wall Street fixture.

A deal would make the bank very happy. Investigations have become a PR nightmare for JPMorgan, the worst of all being the "London Whale" deal that ended up costing the bank billions. Settling on a final sum now and wiping out the threat of much higher litigation-related costs in the future would allow the bank to return on course to continuing its solid recent financial performance.

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