On Tuesday afternoon, American stocks experienced a decrease in value after Walmart and Home Depot’s fourth-quarter financial results and predictions raised doubts about the resilience of the US shopper.[0] The Dow and S&P 500 each closed with their worst day since December 15, with the Dow falling about 696 points, or 2.1%, and the S&P dropping by 2%.[0] The Nasdaq Composite ended with a decrease of 2.5[0]
The share price of Walmart (NYSE:WMT) decreased by 3.9% due to the retail giant’s estimation of lower than expected full-year earnings, citing a cautious view of the economic future for the upcoming year.[1] John Rainey, Walmart’s CFO, noted during the earnings call that the consumer is still subject to significant pressure. He went on to state that when looking at economic indicators, it is evident that balance sheets are weaker and savings rates are lower compared to the past.[2] Therefore, we are proceeding with caution for the remainder of the year.[3] The company’s stock saw a recovery by the early afternoon, with a closing up of approximately 0.6%.[0]
Shares of Home Depot (NYSE:HD) dropped by 4% when the company reported a surprise decrease in fourth-quarter comparable sales and predicted an annual profit lower than what was expected on Tuesday. This is due to the higher expenses and a more competitive labor market. Neil Saunders, managing director of GlobalData, declared that the economy’s deceleration, the pressures on shoppers, and a year of withstanding gravity have finally taken their toll on Home Depot.[4] In 2022, the amount of existing homes sold began to drop, but the decrease became more prominent in December, where the amount of finished sales fell by a drastic 36.3%.[0] On Tuesday, Home Depot stock experienced a 7.1% decrease in its share value
Approximately 70% of the nation’s gross domestic product (GDP), the most comprehensive representation of the United States economy, is generated by consumer spending. A decrease in this spending could negatively impact economic growth and even cause the US to enter a recession.[4] The most recent economic figures have been positive.[5] Traders have become concerned, given the present state of inflation and warnings from major retail companies such as Walmart and Home Depot, that the Fed will maintain higher interest rates for a longer period of time.[0]
Investors are closely monitoring the increase in bond yields in addition to the retail earnings reports of multiple companies, which includes Walmart (WMT).[6] In addition, existing home sales reached their lowest point in 12 years.[6]
0. “Dow drops by nearly 700 points as retail earnings disappoint” WENY-TV, 21 Feb. 2023, https://www.weny.com/story/48422167/dow-drops-by-nearly-700-points-as-retail-earnings-disappoint
1. “5 stocks to watch on Tuesday: Walmart, Home Depot and more (NYSE:WMT)” Seeking Alpha, 21 Feb. 2023, https://seekingalpha.com/news/3938327-5-stocks-to-watch-on-monday-walmart-home-depot-and-now
2. “Dow drops by nearly 700 points as retail earnings disappoint” ABC17News.com, 21 Feb. 2023, https://abc17news.com/news/2023/02/21/dow-drops-more-than-500-points-as-retail-earnings-disappoint/
3. “Don’t Step in Wall Street’s “Bull Trap”” Unseen Opportunity, 21 Feb. 2023, https://www.unseenopp.com/dont-step-in-wall-streets-bull-trap/
4. “Big Retail’s cautious forecasts are spooking Wall Street” kuna noticias y kuna radio, 22 Feb. 2023, https://kesq.com/news/2023/02/22/big-retails-cautious-forecasts-are-spooking-wall-street/
5. “Dow drops by more than 650 points as retail earnings disappoint” NBC Palm Springs, 22 Feb. 2023, https://nbcpalmsprings.com/2023/02/21/dow-drops-by-more-than-650-points-as-retail-earnings-disappoint/
6. “Dow Sheds Over 500 Points as Selloff Deepens” Schaeffers Research, 21 Feb. 2023, https://www.schaeffersresearch.com/content/ezines/2023/02/21/dow-sheds-over-500-points-as-selloff-deepens