MarketBites: Retail Earnings Ease Recession Fears
Portfolio Manager Commentary:
Retail was the story of the day yesterday as both Walmart and Home Depot beat their earnings expectations. Walmart stock rose 5.11% and Home Depot stock closed up 4.06%. Strong performances from these retailers sent the Dow Jones Index up 0.71%, followed by the S&P rising 0.19%. The Nasdaq finished slightly down with a -0.19% slide. The better-than-expected earnings results were able to relieve some recession concerns, as they showed a much more favorable snapshot of consumer spending when compared to last month’s numbers.
On July 25, Walmart had cautioned investors about its earnings for the rest of the year due to high fuel and food prices forcing consumers to dial back their spending. In response, Walmart decided to cut prices, which generated a remarkable customer response over the past month. Being the leading retailer in the United States, Walmart’s results show an indication of the nation’s overall economic health. As such, even with worrisome signs of a recession looming ahead, consumer spending remains strong. Which is great news, considering that consumer spending accounts for roughly three-quarters of U.S. economic activity.
Chart of the Day:
Funding for fintech companies worldwide totaled $50.7 billion in the first half of 2022. This funding amount is down significantly from the first half of 2021 by nearly 23%.
Source: CB Insights, "State of Fintech Q2 2022"
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