A popular argument that investors should buy shares of Wal-Mart ( WMT) suffered a blow to its credibility Thursday. The theory, which made the rounds on Wall Street last year, argued that Wal-Mart must be getting ready for a big jump in its stock price, since it hasn't really budged in six years while its sales and earnings have grown steadily. People have made large fortunes by following such arguments, but in this case, the bulls ignored the many factors working against the world's largest retailer. Economic headwinds are blowing hardest in the face of Wal-Mart's core customer. On Thursday, a Merrill Lynch analyst abandoned her bullish stance on the stock and downgraded it, citing those headwinds, along with gathering signs that the company's sales growth is petering out. Shares of Wal-Mart were recently down $1, or 2.2%, to $44.15 after Merrill's Virginia Genereux lowered her rating on the retailer to neutral from buy. That doesn't sound terribly negative, but she also lowered her earnings estimates for the retailer for the next two years well below Wall Street's expectations. Meanwhile, crude oil futures trading on the Nymex hit a new record at $76.90, signaling no rest for consumers from their pains at the gas pump. That pain hits the hardest in lower-income demographics that make up Wal-Mart's core customer group, and the company has been particularly outspoken about the negative effect of gas prices on its sales. Genereux said in her report that nearly half of Wal-Mart's sales come from households earning $30,000 or less. Also, U.S. households spent an average of $4,600 on energy in 2005, up 19% from 2004. "So while energy spending represents only about 6% of total disposable income, it is disproportionately more for a household earning $30,000 in annual income," wrote Genereux.