The global economy was rattled by a significant market plunge that reverberated throughout the financial world. On Thursday, US stocks took a nosedive following a grim outlook provided by the world’s largest retailer, Walmart, who cautioned that 2025 would be a turbulent year and anticipated a slowdown in sales as consumers seemed to be reaching their spending limits. The Dow plummeted by over 600 points, a 1.5% drop, propelled by Walmart’s announcement, which resulted in a 7% decline in the company’s stock value. Investor confidence wavered as concerns grew over a potential reduction in consumer spending, accounting for two-thirds of the economy, due to the likelihood of shoppers cutting back in response to rising prices. The S&P 500 and Nasdaq Composite also took hits, both registering a 0.9% decrease.
Walmart’s Chief Financial Officer, John David Rainey, highlighted the uncertainties surrounding consumer behavior, as well as the impact of global economic and geopolitical conditions during the announcement. The ongoing challenges posed by heightened inflation and long-standing high interest rates are continuing to burden American consumers, creating a complex scenario further compounded by President Donald Trump’s proposed tariffs. Trump’s recent implementation of a 10% tariff on Chinese goods, together with a 25% tariff on steel and aluminum imports, has intensified the economic landscape. Additionally, future tariffs on Mexico and Canada, set to commence in March, along with discussions on reciprocal tariffs on all trading partners, add another layer of uncertainty.
Although Walmart’s substantial size may provide some insulation from tariffs and potential price pressures, its projected slowdown serves as an indicator that the road ahead in 2025 could be challenging, especially for smaller retailers and the industry at large. Recent data from the Commerce Department revealed a significant 0.9% decline in retail sales last month as consumers tightened their belts across various spending categories. This sharp drop from the previous month’s figures fell well below economists’ predictions of a 0.4% decrease, with adjustments made for seasonal fluctuations but not inflation.
Furthermore, the University of Michigan’s latest consumer survey showed a notable surge in Americans’ inflation expectations for the upcoming year, reaching the highest level since November 2023. Concurrently, consumer sentiment experienced a marked decline. This evolving narrative is one to watch closely, with updates to follow. Stay informed with more news and updates from CNN by registering an account at CNN.com.
