Associated Press
08.23.2004

Wal-Mart Stores Inc.'s disappointing sales forecast sent stocks fluctuating Monday as investors' concerns about a slowing economy eclipsed their relief over a drop in oil prices.

October contracts for a barrel of light crude were quoted at $46.53, down 19 cents, on the New York Mercantile Exchange. With oil topping $49 per barrel last week, the recent downturn cheered investors hoping to take advantage of a severely oversold stock market.

However, Wal-Mart's warning about lower than expected August sales curbed Wall Street's enthusiasm; with its reach among consumers, Wal-Mart is seen as a barometer of an already struggling retail sector.

"I think you can make the case that Wal-Mart is related to oil, since oil prices have acted as a kind of tax on consumers that has restricted their spending," said Joseph Keating, chief investment officer at AmSouth Asset Management in Birmingham, Ala. "I think this plays into people's concerns that earnings will be impacted. But we're also seeing oil fall, and barring some sort of major supply disruption, I think they'll continue to fall."

At midday, the Dow Jones industrial average was up 1.47, or 0.01 percent, at 10,111.61. The Dow had fallen more than 15 points earlier in the session.

Broader stock indicators were narrowly higher. The Standard & Poor's 500 index gained 0.90, or 0.1 percent, to 1,099.25, and the Nasdaq composite index was up 6.86, or 0.4 percent, at 1,844.88.

Wal-Mart lowered its August sales forecasts, citing lower back-to-school sales and lost business in Florida from Hurricane Charley. Sales are now expected to range from flat to 2 percent higher. Wal-Mart tumbled 90 cents to $53.75.

Wall Street was pleased with FedEx Inc.'s upbeat outlook, however, seeing the improved forecast as a sign that higher energy costs would not pressure quarterly earnings as much as previously believed. FedEx gained $2.68 to $81.98 after raising its outlook for its first quarter and full 2005 earnings, crediting strong international express and ground shipments.

Toys "R" Us Inc. was up 42 cents at $16.03 after earning 28 cents per share for the quarter, thanks to one-time tax benefits. The company missed analysts' revenue forecasts by nearly $100 million, however, and posted an operating loss as well.

World Wrestling Entertainment Inc. saw its first-quarter earnings more than double, thanks to strong home video and pay-per-view sales of its wrestling extravaganzas. WWE, which lowered its outlook for fiscal 2005, dropped 53 cents to $11.37.

Kmart Holding Co. completed the sale of 18 stores to the Home Depot Inc. for $271 million, allowing the discount retailer to continue consolidating its stores while giving the home improvement retailer room to grow. Kmart fell $1.04 to $75.51, while Home Depot slid 34 cents to $36.02.

Declining issues outnumbered advancers by nearly 3 to 2 on the New York Stock Exchange, where volume came to 434.17 million shares, compared to 467.01 million at the same point on Friday.

The Russell 2000 index of smaller companies was down 0.14, or 0.03 percent, at 547.78.

Overseas, Japan's Nikkei stock average rose 0.7 percent. In afternoon trading, Britain's FTSE 100 was up 0.8 percent, Germany's DAX index surged 1.6 percent, and France's CAC-40 gained 1.5 percent.

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