While you were sleeping: Wal-Mart drops, Home Depot rises

Wall Street moved lower as a fresh slide in Chinese stocks and disappointing earnings from Wal-Mart outweighed better-than-expected US housing data and Home Depot's results.

"We're seeing China dominating headlines and concern the consumer is not all in right now," Bill Schultz, chief investment officer at McQueen, Ball & Associates in Bethlehem, Pennsylvania, told Bloomberg. "Until this economic environment and earnings stabilise, we're going to continue to see the back and forth in stocks."

Concern about China and its demand for commodities such as copper sent prices for raw materials lower. Copper futures fell, with the London Metal Exchange's three-month copper contract sliding as low as $US4983 a tonne, the lowest level in six years.

In late trading in New York, the Dow Jones Industrial Average fell 0.2%, the Standard & Poor's 500 Index declined 0.4%, while the Nasdaq Composite Index shed 0.6%.

On the Dow Jones, slides in shares of Wal-Mart and those of Cisco, down 3.6% and 2.1% respectively, outweighed gains in shares of Home Depot and those of UnitedHealth, up 2.4% and 1.5% respectively.

Wal-Mart shares dropped after the company reported disappointing quarterly earnings and downgraded its full-year forecast.

"It was a big drop," Edward Jones analyst Brian Yarbrough, told Reuters, referring to Wal-Mart's revised forecast, which included 24USc a share to pay for higher wages, training and additional worker hours. "I question whether they will even be able to increase earnings next year."

Shares of Home Depot rose on better-than-expected results, as well as solid US housing data.

"Home Depot and the home-remodeling space remains one of the strong areas of US consumer spending," Peter Keith, senior research analyst at Piper Jaffray in New York, told Reuters.

A report showed US housing starts rose 0.2% to a 1.21 million annualised rate in July, the highest level in nearly eight years, and up from an upwardly revised 1.2 million in June. It came a day after another report showed US builders’ sentiment climbed to the highest level in nearly a decade.

To be sure, building permits dropped 16.3% to a 1.12 million annualised rate last month, following a 1.34 million pace in June.

Overall, the latest signs that the US real estate industry is gathering strength might add to reasons for the Federal Reserve to raise interest rates this year.

"The good data on housing is certainly helpful since it's 4% of the US GDP," Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia, told Reuters. "It's something we know the Fed looks at relative to not only its impact on employment and things residual to the housing market but also to the wealth effect on homeowners."

In Europe, the Stoxx 600 Index finished the day with a 0.2% advance from the previous close. Germany's DAX Index slipped 0.2%, France's CAC 40 Index slid 0.3%, while the UK's FTSE 100 Index fell 0.4%.

(BusinessDesk)