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NEW YORK - US stocks ended sharply lower this morning (NZT), with the three major indexes each down more than 1 per cent, on further signs of distress in the credit markets and a dismal outlook from Wal-Mart Stores.
A profit warning from giant retailer Wal-Mart raised fears that the US consumer may be running out of spending power.
The company said that low-income Americans, its core customers, were stumbling under the weight of rising interest rates, fuel prices and utility bills.
Its comments came on the same day that Home Depot, the giant DIY chain, revealed sluggish sales, blaming the housing market downturn.
Lee Scott, Wal-Mart's chief executive, described the latest quarterly results as disappointing.
"It is no secret that many customers are running out of money towards the end of the month," he said.
"The pay cheque cycle is more pronounced now than it ever has been."
Wal-Mart made a profit of US$3.1bn in the three months to the end of July, but that fell short of Wall Street's expectations, and the company compounded the misery for its shareholders by saying the next quarter would also fail to match forecasts.
The stock fell 5 per cent in early trading.
As the world's largest retailer, Wal-Mart is seen as a bellwether of the consumer economy, and Mr Scott warned that pressures on consumer spending were not limited to the US.
Overseas operations, particularly elsewhere in the Americas, were also girding for a slowdown.
The Dow Jones industrial average sank 207.61 points, or 1.57 per cent, to end unofficially at 13,028.92.
The Standard & Poor's 500 Index slid 1.8 per cent, and the Nasdaq Composite Index dropped 1.7 per cent.
- REUTERS, INDEPENDENT