NEW YORK — Wal-Mart pulled down the Dow Jones industrial average Monday after analysts at JPMorgan lowered their outlook for the company. The Standard & Poor’s 500 index and the Nasdaq closed slightly higher.
JPMorgan’s analysts say the world’s largest retailer risks losing customers as low-income customers head to discount stores and other shoppers return to more expensive stores. Wal-Mart dropped 1.6 percent and was the weakest company among the 30 that make up the Dow Jones industrial average.
“This is a profit-driven recovery on top of good economic figures,” said Jeffrey Saut, chief investment strategist at Raymond James & Associates in St. Petersburg, Fla., who helps manage $252 billion. “Does the overbought condition change the fundamental backdrop? I’d say not at all.”
Stocks traded in a tight range throughout the day as investors weighed the impact of President Barack Obama’s $3.73 trillion budget proposal for the next fiscal year.
Obama’s budget includes a five-year freeze on many domestic-spending programs. The White House contends the budget plan for the fiscal year, beginning Oct. 1, puts the government on course to cut deficits by about $1.1 trillion over the coming decade.
Republicans and Democrats have sparred over how much spending to cut. The worry is that slashing spending could imperil the economic recovery.
Bond prices held steady after details of the budget proposal were revealed. The yield on the benchmark 10-year Treasury note edged down to 3.62 percent, slightly lower than late Friday. A jump in Treasury bond yields would suggest that investors see U.S. debt as increasingly risky.
The Dow fell 5.07 points, or less than 0.1 percent, to 12,268.19. The Standard & Poor’s 500 rose 3.17 points, or 0.2 percent, to a 32-month high of 1,332.32. The Nasdaq composite gained 7.74 points, or 0.3 percent, to 2,817.18.
The S&P 500 has gained 97 percent from a 12-year low in March 2009 amid government-stimulus measures and higher-than-estimated earnings. The rally Monday left the S&P 500 trading at 15.9 times the reported operating earnings of its companies Feb. 11, the highest valuation since June.
The benchmark gauge for U.S. stocks has rallied 27 percent since Federal Reserve Chairman Ben Bernanke suggested Aug. 27 that he was prepared to act to spur economic growth.
“The market isn’t cheap anymore,” said Mike Morcos, senior money manager at Old Second Wealth Management in Aurora, Ill., which oversees about $1.2 billion.
