MarketBites: Walmart News Dictates Markets
Portfolio Manager Commentary:
Stocks fell on Tuesday as weaker economic data and Walmart's profit warning added to recession concerns.
On the economic data front, July's Consumer Confidence Index came in below expectations and new home sales fell to 590,000 from an expected 655,000. Month-over-month new home sales slumped 8.1% in June. Then Walmart piled on with its own set of bad news. The largest retailer in America (and proxy for the general strength of the U.S. consumer) cut its full-year profit forecast, citing lower consumer spending and elevated costs. Walmart's warning soured investor optimism for retail names as Target, Kohl's, TJX, Ross Stores, Shopify, and even Amazon sold off.
On the bright side, 3M surged after announcing a plan to spin off its health care unit. McDonald's and Coca-Cola also gained after reporting stronger than expected earnings.
After the bell, both Microsoft and Google missed earnings estimates. Google traded slightly higher as advertising revenue wasn't as bad as Snapchat's last week. Today, the next advertisement behemoth, Meta, will report earnings.
Investors are now going to turn their focus on the Federal Reserve, which is expected to raise interest rates by 0.75% today even as the U.S. economy edges closer to a recession.
Chart of the Day:
The erosion in real purchasing power of American workers will weigh on consumer optimism and spending.