A slide for Walmart pulls Wall Street from its record, and Dow drops 450 points

NEW YORK — A sharp slide for Walmart on Thursday helped pull Wall Street off of its record.

The Standard & Poor’s 500 slipped 0.4% for its first drop after setting all-time highs in each of the last two days. The Dow Jones industrial average lost 1%, and the Nasdaq composite sank 0.5%.

Walmart drove the market lower by falling 6.5%, even though the retailer reported stronger profit for the latest quarter than analysts expected. The Bentonville, Ark., giant gave a forecast for upcoming profit that fell short of analysts’ expectations as shoppers across the country deal with still-high inflation and the threat of tariffs from President Trump.

Walmart is still forecasting growth in revenue for this upcoming year and said it has experience in navigating the effects of tariffs, but its profit outlook helped pull stocks lower across the retail industry. Costco fell 2.6%, Target dropped 2% and Amazon lost 1.7%.

Palantir Technologies was another weight on the market. It fell 5.2% to follow its 10.1% drop Wednesday, after U.S. Defense Secretary Pete Hegseth said he wants to cut $50 billion in spending next year. The software company got 55% of its $2.9 billion in revenue last year from government customers.

They helped offset an 8.5% jump for Baxter International, which reported better profit for the latest quarter than analysts expected. It credited strength for its pharmaceuticals business, as well as for its medical products and therapies.

Burger chain Shake Shack rallied 11.1% after likewise reporting a stronger-than-expected profit. Chief Executive Rob Lynch said sales trends remained solid during the quarter, even though bad weather around the country and wildfires in the Los Angeles area kept some customers away.

Chinese e-commerce giant Alibaba saw its stock that trades in the United States climb 8.1% after reporting stronger profit for the latest quarter than analysts expected. It also talked up its artificial-intelligence developments.

All told, the S&P 500 fell 26.63 points to 6,117.52. The Dow dropped 450.94 points to 44,176.65, and the Nasdaq composite sank 93.89 points to 19,962.36.

In the bond market, Treasury yields edged lower after a report showed more U.S. workers applied for unemployment benefits last week than economists expected. It’s an indication the pace of layoffs could be worsening, but the number still remains relatively low compared with history.

A separate report said manufacturing in the mid-Atlantic region is still growing but not as strongly as economists expected.

Such numbers are likely to keep the Federal Reserve on hold when it comes to interest rates. Last month, the Fed refrained from cutting its main interest rate for the first time at a policy meeting since it began doing so in September.

Although lower rates can boost the economy and prices for investments, they can also give inflation more fuel. And Fed officials were discussing at their last meeting how Trump’s proposed tariffs and mass deportations of migrants, as well as strong consumer spending, could push inflation higher this year.

The yield on the 10-year Treasury fell to 4.50% from 4.54% late Wednesday. The yield on the two-year Treasury, which more closely tracks expectations for Fed moves, held steadier. It remained at 4.27%, where it was late Wednesday.

Traders have been paring back their expectations for how many interest rate cuts the Fed may deliver this year, with some predicting zero. Many are pointing to the potential effects of tariffs, but much of Wall Street is also banking on their ultimate effect being smaller than they initially seemed.

“Given the high political costs of elevated inflation, we continue to believe that the Trump administration will not want to jeopardize US economic growth or risk higher inflation through broad and sustained tariffs,” said Solita Marcelli, chief investment officer, Americas, at UBS Global Wealth Management.

Trump has already given brief, 30-day reprieves for tariffs he had announced on Mexico and Canada to give time for more negotiations.

In stock markets abroad, indexes fell across much of Europe and Asia.

Hong Kong’s Hang Seng fell 1.6% for one of the world’s larger moves after China’s central bank left its benchmark interest rate unchanged, in a move it said was meant to maintain financial stability. Stocks in Shanghai edged down by less than 0.1%.

Choe writes for the Associated Press. AP writers Yuri Kageyama and Matt Ott contributed to this report.