Wal-Mart earnings
drag down stocks

NEW YORK » Stocks tumbled after Wal-Mart Stores Inc. said higher gasoline prices curbed customer spending. The news sent many retail stocks lower, while government data showing a larger-than-expected jump in inflation also dampened investor enthusiasm.

The Standard & Poor's 500 index fell 14.53, or 1.18 percent, to 1,219.34, its biggest point drop in almost four months.

The Dow Jones industrial average dropped 120.93, or 1.14 percent, to 10,513.45 and the Nasdaq composite index slid 29.98, or 1.38 percent, to 2,137.06.

Wall Street is facing increasing evidence that high energy prices, spurred by record crude oil futures, are nipping consumer spending. Wal-Mart's stock drooped after the company blamed lower quarterly revenues on higher gasoline prices. Shares of other retailers, including Target Corp., Home Depot Inc. and Limited Brands Inc. dropped as well.

"We are starting to see the bite from some of the risks that have been lurking in the background, like oil," said Hans Olsen, managing director and chief investment officer at Bingham Legg Advisers. "I think it's going to continue to be tougher for this market to do anything positive."

Bonds rose sharply as stocks moved lower, with the yield on the 10-year Treasury note falling to 4.21 percent from 4.28 percent late Monday.

Investors focused on Wal-Mart and its warnings of future troubles. While the Dow component's earnings beat Wall Street's profit forecasts by 2 cents per share, the company's profit gain was its smallest in four years and its revenues missed estimates. The company warned that its third-quarter earnings would be lower than expected, again blaming high gas prices for eating into shopper's spending. Wal-Mart fell $1.53 to $47.57.

Fellow Dow industrial Home Depot Inc. fell 94 cents to $40.67 despite reporting a 14 percent jump in quarterly profits that beat Wall Street's expectations by 3 cents per share on strong revenues. The company, apparently avoiding the energy pinch felt by Wal-Mart and other retailers, also increased its profit forecasts for the rest of the year.

Hewlett-Packard continued its turnaround in the third quarter, with the giant computer and printer maker announcing yesterday that its revenue rose 10 percent, beating analysts' expectations. Profit in the quarter fell sharply, though, largely because of a one-time tax charge of roughly $800 million resulting from Hewlett's desire to repatriate billions of dollars in cash to the United States.