Thursday saw a broad sell-off across the three major stock market averages, just one day after the S & P 500 reached a new closing high, and strategists and investors analyzed what could have caused the move. Walmart led the Dow Jones Industrial Average lower, falling more than 6% after the nation’s largest retailer gave a weak earnings forecast, saying profit growth will slow in its current fiscal year. “The one thing I don’t see, given that we’ve gone through this earnings [season], is that catalyst to really explode the market higher,” said Jay Woods, chief global strategist at Freedom Capital Markets. “Right now, we can go up slow and steady. We can see rotation under the surface. This is all positive. We’re churning. We’re digesting gains.” Earlier this month, Walmart’s forward price-to-earnings ratio almost reached 38, the highest in 20 years, according to FactSet. Walmart almost doubled last year, climbing 72%. “Unless there was blowout beat and raise, this was the most likely reaction considering guidance was a bit more cautious for the year,” said Ken Mahoney, CEO of Mahoney Asset Management. For the broader market, “this looks like a breakout retest, a trip back to the 50-day [moving average], so there is nothing to really sound the alarm bell over, in our eyes,” Mahoney said. Palantir also damaged sentiment Thursday, falling 5% after sliding about 10% Wednesday. The pullback came as the company’s chief executive, Alex Karp, disclosed a new stock sale plan and the Washington Post said Defense Secretary Pete Hegseth plans to cut the U.S. defense budget by 8% annually. “They took down a slow-and-steady stock, and then they took down a high-octane stock,” said Larry Tentarelli, chief technical strategist of the Blue Chip Daily Trend Report, referring to Walmart and Palantir. “So you kind of get selling across the board.” Palantir was selling at 62 times forward price-to-sales just two weeks ago, the highest of any company in the S & P 500 at the time. It soared about 341% in 2024. “You start to see a little de-risking just based off of the fact that valuations are becoming more scrutinized,” JC O’Hara, chief technical strategist at Roth Capital Partners, told CNBC. “Walmart was one of the first signals that consumer behavior in terms of spending could be changing or could be becoming a little bit more conservative. So I think managers are looking at, again, their portfolio and just becoming a little bit more cautious.” ‘Stubborn inflation’ Federal Reserve officials added to the nervousness on Wall Street when several said Thursday that they expect rates to hold steady until there’s more evidence that inflation is nearing their 2% target. St. Louis Federal Reserve President Alberto Musalem noted that while he believes price increases will continue to moderate, risks of “moving higher seem skewed to the upside.” As a result, policy should “remain modestly restrictive,” as it is now, and then ease gradually at some later point. Musalem carries extra weight as a voter member of the rate-setting Federal Open Market Committee this year. Similarly, Atlanta Fed President Raphael Bostic expressed concern that inflation could stay elevated, noting potential pressures from tariffs and immigration policy. Bostic cautioned that “this is no time for complacency.” “The economy faces heightened uncertainty. Unusual macroeconomic dynamics that have led us to this happy place might not last,” said Bostic, who isn’t a voting member of the FOMC. Those remarks came as the Philadelphia Fed’s manufacturing survey for February showed increases in prices paid and prices received . O’Hara said he believed those figures added to inflation concern among investors. “You have this stubborn inflation following the FOMC, who basically said they’re on hold, and then tomorrow you have University of Michigan inflation expectations,” O’Hara said. “You put everything together, and you can have an upside inflationary shock tomorrow.” The market from here Frank Gretz, technical analyst at Wellington Shields, noted that a little more than half of all New York Stock Exchange stocks are trading above their 200-day moving average, an unusual 50-50 split that seldom holds. “That to me suggests half of the stocks in the New York Stock Exchange … are in downtrends, against an S & P that’s at a new all-time high,” he said. “That’s not a healthy technical background.” Others were more sanguine. Robert Ruggirello of Brave Eagle Wealth Management believes it’s “an encouraging sign” that the S & P 500 hasn’t fallen below 6,000, even with the latest decline. “The S & P 500 has been able to remain above 6,000 for some time now, which is an encouraging sign as the index looks to keep climbing the wall of worry,” Brave Eagle’s chief investment officer said. After back-to-back strong years for the stocks, more moderate gains would be normal, according to Ari Wald, head of technical analysis at Oppenheimer. “Today’s weakness is not overly damaging, [and is] still within the context of a trend that is still higher for the market,” he told CNBC. “This continues to be a market of haves and have nots, and you got to pick your spots a little bit better than we’ve had to versus the last two years, when kind of everything was rallying together.” — CNBC’s Sarah Min, Brian Evans, Alex Harring, Jesse Pound and Jeff Cox contributed reporting.