The move “implies significant margin contraction along with modest sales growth,” Grom added.
The dip in the broader consumer staples and retail sector may be short-lived as the Wal-Mart weakness is related to more structural changes within the individual company, albeit Wal-Mart is still the largest retailer in the world. The broader sector may still move on improving economic strength ahead.
Consumer Staples Select SPDR
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Full disclosure: Tom Lydon’s clients own shares of XLP.
Max Chen contributed to this article.