The Dow Jones Industrial Average (^DJI 0.01%) looked a little different on Monday, with (CRM -2.25%), Amgen (AMGN -0.21%), and Honeywell International (HON 0.15%) joining the index. All three stocks slid on Monday, helping to drag the Dow down 0.78% by 12:40 p.m. EDT.

Also contributing to the Dow's losses was Walmart (WMT 0.83%). While the stock has surged this year, an analyst downgraded it on Monday over concerns of a spending slowdown for the discount retailer.

A Wall Street street sign.

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Dow changes take effect

The stocks that make up the Dow have only changed 60 times since the index was created in 1896. On Monday, the latest change took effect.

Salesforce, Amgen, and Honeywell International officially entered the Dow on Monday, replacing ExxonMobil, Pfizer, and Raytheon Technologies. This happened on the same day that Dow component Apple completed its 4-for-1 stock split. Since the Dow is weighted by stock price, that split lowered the Dow's weighting toward technology stocks, which prompted the changes.

The new Dow components didn't get off to a great start as part of the index. By early Monday afternoon, Salesforce stock was down 1.6%, Amgen shares were off 0.5%, and Honeywell stock had fallen 2.1%.

Walmart hit by analyst downgrade

Mega-retailer Walmart has seen sales surge during the pandemic. During the second quarter, the company posted U.S. comparable-store sales growth of 9.3%. That was driven by both general merchandise and groceries, as well as a 97% increase in e-commerce sales.

Economic stimulus likely played a big role in Walmart's recent success. Americans received direct stimulus checks after the pandemic forced many businesses to temporarily close, and unemployment benefits were boosted by a $600 weekly federal supplement that ran through July.

This extra cash combined with less spending on restaurants and travel led to increased consumer spending in certain categories. Walmart saw strong demand for TVs, computing and connected-home products, and outdoor entertainment and sports products. This was on top of elevated demand for cleaning supplies and other pandemic-related products.

One analyst thinks that less economic stimulus in the year ahead will hurt Walmart's results. R5 Capital downgraded the stock on Monday from buy to hold, citing concerns about the retailer's sales over the next year, as analyst Scott Mushkin expects lower unemployment benefits and a contraction in disposable income to translate to a less favorable environment for Walmart.

Mushkin is likely right. In fact, Walmart warned during its second-quarter earnings call that the waning of economic stimulus toward the end of the quarter brought its comps growth back to a normal range. Comps in July were up just 4%, even with the federal supplemental unemployment benefit still in effect.

Congress has yet to agree on another stimulus bill, and any bill that manages to get passed will likely be smaller in scope than the CARES Act passed in March. Without economic stimulus, Walmart's customers are unlikely to spend as freely in a rough economy.

The retailer's efficiency and low pricing will allow it to weather whatever storm is coming, but sales growth is unlikely to be all that impressive without additional economic stimulus. The e-commerce business may continue to boom as the pandemic plays out, but the in-store business likely won't fare as well.

Shares of Walmart were down about 2.4% by early Monday afternoon on the analyst downgrade. The stock is still up about 15% since the start of the year.