Shares of Walmart Inc. (NASDAQ: WMT) dropped sharply on Wednesday, falling 4.2% to $108.51 in mid-afternoon trading, after a report from Cleveland Research flagged slowing comparable sales trends in the U.S. The decline erased approximately $38 billion in market capitalization, a sum nearly two-thirds the size of Target Corp.'s (NYSE: TGT) total market value.
The selloff was largely company-specific, as other major retailers and broader market indices remained stable. The SPDR S&P 500 ETF (NYSEARCA: SPY) was flat, while the Consumer Staples Select Sector SPDR Fund (NYSEARCA: XLP) edged up 0.2% and the SPDR S&P Retail ETF (NYSEARCA: XRT) added 0.3%. Costco Wholesale Corp. (NASDAQ: COST) slipped less than 1%, Amazon.com Inc. (NASDAQ: AMZN) ticked higher, and Kroger Co. (NYSE: KR) posted gains, suggesting investors were not broadly exiting retail stocks.
According to a report on Nasdaq, Cleveland Research's channel checks indicated that Walmart's same-store sales have slowed and that the retailer is reducing prices to clear excess inventory. This raises questions about whether Walmart can meet its sales targets for the quarter ending in July. The company had guided for second-quarter net sales growth of 4% to 5% in constant currency, with adjusted earnings per share between $0.72 and $0.74.
Walmart's recent performance has been solid, with first-quarter U.S. comparable sales up 4.1% (excluding fuel), global e-commerce rising 26%, global advertising sales climbing 37%, and membership fee revenue increasing 17.4%. However, the Cleveland Research note suggests that the second quarter may face headwinds, particularly as the company cuts prices to move inventory, potentially squeezing margins.
During Walmart's May earnings call, CFO John Rainey noted that the company's value proposition was attracting shoppers as higher fuel prices strain household budgets. He also disclosed that Walmart incurred approximately $175 million in unplanned fuel costs and warned of possible retail price inflation if fuel costs remain elevated. These factors, combined with the latest sales data, add uncertainty to Walmart's near-term outlook.
Walmart shares trade at a price-to-earnings multiple of 38, which is above Target's 17.3 and Amazon's 29.2 but below Costco's 46.6. Wall Street analysts remain largely bullish, with a consensus price target of $138.85, implying roughly 27.8% upside from current levels. Bank of America's Christopher Nardone recently stated that conditions favor Walmart taking market share, noting that price rollbacks are up 20% year-over-year. Morgan Stanley's Simeon Gutman and Pedro Gil maintained an Overweight rating and $140 price target.
The decline in Walmart shares also weighed on the Dow Jones Industrial Average, with the stock's $4.75 drop translating to about 28 points of pressure on the index. The broader market, however, remained relatively calm, with the S&P 500 flat and the tech-heavy Nasdaq slightly higher.
Wednesday's trading session was a standard live session, with markets operating normally ahead of the Independence Day holiday on Friday, July 3, 2026.
