The gloom surrounding the US economy intensified on Tuesday as Wal-Mart and Home Depot, the country’s two largest retailers, said they had been shunned by consumers struggling with a housing slump and higher fuel prices.

The poor performance by an economic bellwether such as Wal-Mart, which missed Wall Street’s second-quarter expectations and cut profits forecasts for the year, surprised investors. Its shares tumbled more than 5 per cent – their biggest fall in more than five years – during New York’s morning session.