STOCKS FALL, WALMART DROPS 10%: Here's what you need to know

Stocks fell as Walmart shares tumbled to the lowest levels in over a decade, while gold surged to a three-week high.

First, the scoreboard:

• Dow: 16,908.11, -173.78, (-1.02%)
• S&P 500: 1,992.21, -11.48, (-0.57%)
• Nasdaq: 4,776.91, -19.69, (-0.41%)

And now, the top stories on Wednesday:

1. Walmart shares had their biggest intra-day drop since 1988, falling by as much as 10%, after the company cut its forecast for profits over the next two years. As it held its investor day, the world's largest retailer forecast an earnings decline of 6% to 12% in 2017. The reason? Higher wages. "Operating income is expected to be impacted by approximately $1.5 billion from the second phase of our previously announced investments in wages and training as well as our commitment to further developing a seamless customer experience," CFO Charles Holley said in a statement.
2. And Walmart CEO Doug McMillon gave some color on the economy, in a CNBC interview. He shrugged when asked how the US economy was doing. "It's steady. It's OK," he said. He added, however, that back-to-school sales were "pretty good". On why consumers aren't splurging savings from lower gas prices, he said they had debt and other issues to deal with.
3. For more color on the economy, we got the Federal Reserve's latest Beige Book, with anecdotes from its 12 regions taken from mid-August to early October. It showed that the economy continued to expand at a moderate pace. Consumer spending was also growing gradually, while wage growth was mostly flat. The energy sector was reported to be worse in this coverage period than in the previous one.
4. Retail sales whiffed, rising 0.1% in September. Excluding autos and gas, "core" retail sales were flat month-on-month; both missed estimates. Sales at gas stations fell 3.2%, the most for any business category, reflecting the drop in gas prices. The strong dollar continues to weigh down the prices of imported goods and nominal retail sales, noted Pantheon Macroeconomics' Ian Shepherdson to clients.
5. And as Capital Economics' Paul Ashworth noted, even the iPhone couldn't save retail sales. "The release of the new iPhone model towards the end of last month didn't do much to boost electronics sales, which actually contracted by 0.2% [month over month]," he wrote in a client note. Sales of the new iPhones had been expected to boost the headline by at least a few basis points.
6. Inflation continued to be a no-show as producer prices fell more than expected in September. Prices received from domestic goods and services fell 0.5% month-on-month, and 1.1% year-on-year. September was the eighth straight month that the producer price index fell.

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