US stocks drop on lower oil, weak Walmart outlook

People walk along Wall Street before the opening bell of the New York Stock Exchange (NYSE) on Feb 12, 2016.
People walk along Wall Street before the opening bell of the New York Stock Exchange (NYSE) on Feb 12, 2016. PHOTO: BLOOMBERG

NEW YORK (AFP) - Wall Street stocks fell Thursday, ending a three-day rally as oil prices stagnated and Wal-Mart shares tumbled on a poor sales outlook.

The Dow Jones Industrial Average shed 40.40 points (0.25 per cent) to 16,413.43.

The broad-based S&P 500 dropped 8.99 (0.47 per cent) to 1,917.83, while the tech-rich Nasdaq Composite Index fell 46.53 (1.03 per cent) to 4,487.54.

Brent oil prices dropped after US stockpiles increased again and Saudi Arabia ruled out cutting oil production.

Wal-Mart Stores dropped 3 per cent after trimming its 2017 sales forecast due to the strong dollar and the impact of store closures.

“We had three strong days in a row, it’s not unusual to see some kind of a pause,” said Art Hogan, chief market strategist at Wunderlich Securities.

Banking shares were in retreat, with Bank of America falling 2.6 per cent, Citigroup 2.2 per cent and JPMorgan Chase 1.6 per cent.

Technology shares were also weaker. Apple lost 1.9 per cent, Facebook 1.6 per cent and Netflix 4.5 per cent.

IBM jumped 5.1 per cent as it announced a US$2.6 billion (S$3.6 billion) acquisition of Truven Health Analytics, a provider of cloud-based health-care data. The deal is part of IBM’s effort to beef up its “Watson” big-data technology.

Morgan Stanley upgraded IBM, saying its transformation to more of a cloud-based business is “underappreciated.” Ingram Micro, which distributes personal computers and other technology products, surged 22.6 per cent on news it agreed to be acquired by China’s HNA for US$6 billion.

Perrigo, which makes over-the-counter pharmaceutical profits, fell 10.2 per cent as it projected 2016 adjusted earnings of US$9.50 to US$9.80 per share compared with analyst expectations for US$9.74 per share.

Nvidia,which provides graphics and other visual computing technology, jumped 8.6 per cent as it reported fourth-quarter net income of US$207 million, up 7.3 per cent from the year-ago period.

Two other companies with big drops following earnings were MGM Resorts International, which lost 8.3 per cent, and the Jack in the Box restaurant chain, which sank 16.2 per cent.