The Dow's Early Gain Fizzles: Why Are Wal-Mart and Home Depot Falling?

The Dow Jones Industrials gave up its early gain despite strong earnings reports from blue-chip components this morning, as retail giants Home Depot and Wal-Mart fell.

Apr 15, 2014 at 11:00AM

The Dow Jones Industrials (DJINDICES:^DJI) gave investors another roller-coaster ride in early trading Tuesday, initially soaring 100 points on positive earnings news from two components but then giving up all of that gain in the next half hour. As of 11 a.m. EDT, the Dow was actually down 10 points. One of the more surprising aspects of that drop was that two retail giants -- Wal-Mart (NYSE:WMT) and Home Depot (NYSE:HD) -- were among the biggest losers in the Dow, despite strong economic data yesterday pointing to improving retail sales. Given the vital role that both companies play in retail, investors need to understand why these stocks gave up ground amid what appeared to be a favorable environment for the sector.

Source: Home Depot.

Wal-Mart's 0.8% drop followed an analyst downgrade that expressed fears that the retail giant would miss out on the overall gains in retail activity. Even though the economic recovery has lifted financial prospects for millions of American households, the low-income families that Wal-Mart relies on for its business remain under pressure, with recent reports from dollar-store competitors confirming the overall trend. Meanwhile, despite Wal-Mart's best efforts to position its website to offer customers flexibility in ordering options, including store pickup and experiments at same-day delivery, competition from online-retail specialists continues to challenge the company's ability to grow. The big question will be whether Wal-Mart's customer base will eventually share in financial gains from the recovery and return to their former higher-volume shopping habits.

Home Depot's 1.2% decline is harder to explain, especially since (unlike Wal-Mart) the home-improvement retailer didn't participate much in Monday's Dow rally. Home Depot has a different seasonal dynamic than most retailers, with the coming spring season being the most important for the company and its industry peers. What Home Depot is counting on is that customers hit hard by a long winter will come out in droves to celebrate the arrival of spring, leading to greater revenue growth even than the retailer is used to seeing at this time of year. Yet Home Depot faces the concern that winter weather is still lingering throughout much of the nation, potentially creating even further delays and adversely affecting the last month of its fiscal second quarter.

Investors should always look beyond the day of a news release like the retail-sales data yesterday to see what kind of follow-through action stocks present. In the case of Home Depot and Wal-Mart, shareholders are clearly skeptical that the two companies can sustain any momentum from favorable economic signs.

Your credit card may soon be completely worthless
The plastic in your wallet is about to go the way of the typewriter, the VCR, and the 8-track tape player. When it does, a handful of investors could stand to get very rich. You can join them -- but you must act now. An eye-opening new presentation reveals the full story on why your credit card is about to be worthless -- and highlights one little-known company sitting at the epicenter of an earth-shaking movement that could hand early investors the kind of profits we haven't seen since the dot-com days. Click here to watch this stunning video.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Home Depot. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers