Tuesday, July 26, 2022

Markets slide lower after Walmart tumbles on profit warning

Dow was off 115, decliners over advancers 4-3 & NAZ pulled back 174.  The MLP index went up 2+ to the 206s & the REIT index did little in the 421s.  Junk bond funds were mixed & Treasuries are heavily purchased, bringing lower yields.  Oil went up 1 to the 97s & gold fell 4 to 1714.

AMJ (Alerian MLP index tracking fund)

 

 

 




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Walmart (WMT), a Dow stock & Dividend Aristocrat, lowered its profit outlook for Q2 & the full year, saying soaring inflation is taking a toll on the retail giant.  The company expects adjusted EPS for Q2 to decline to 8-9%, & drop to the 11-13% range for fiscal year 2023.  Double-digit food inflation is higher than it was at the end of last qtr, noting that "this is affecting customers' ability to spend on general merchandise categories and requiring more markdowns to move through the inventory, particularly apparel," the company said"The increasing levels of food and fuel inflation are affecting how customers spend, and while we’ve made good progress clearing hard-line categories, apparel in Walmart U.S. is requiring more markdown dollars," CEO Doug McMillon added.  "We’re now anticipating more pressure on general merchandise in the back half. However, we’re encouraged by the start we’re seeing on school supplies in Walmart U.S.," he continued.  The stock tumbled 11.53 (9%).
If you would like to learn more about
WMT, click on this link:
club.ino.com/trend/analysis/stock/WMT?a_aid=CD3289&a_bid=6ae5b6f7

Walmart cuts profit forecasts as inflation takes toll on retail giant

The IMF slashed its global growth outlook for 2022 & 2023, warning the world economy faces a "gloomy and more uncertain" future that could include a recession.  The Washington-based institution said in its latest World Economic Outlook that global GDP will grow by 3.2% this year – a 0.4 percentage point drop from its Apr estimate.  The IMF expects global growth to decelerate further to 2.9% next year.  By comparison, the economy grew by 6.1% last year following the brief but extremely severe recession in 2020.  "The world may soon be teetering on the edge of a global recession, only two years after the last one," Pierre-Olivier Gourinchas, the IMF's chief economist, noted.

IMF warns global economy teetering on brink of recession as it slashes growth outlook

Coca-Cola (KO) a Dow stock & Dividend Aristocrat, reported quarterly earnings that topped expectations as its sales at restaurants, theaters & other venues recovered from the pandemic.  KO now expects organic revenue growth of 12-13% for the full year, up from its previous guidance for growth of 7-8%.  But it noted that commodity price inflation is expected to be higher than previously forecast & stuck by its outlook for comparable EPS to grow 5-6% from a year ago.  Revenue in Q2 increased 12% from a year ago on higher pricing & an increase in global case volume, which was driven by recovery in its away-from-home business.  Before the pandemic, KO generated about ½ of its revenue from away-from-home occasions, like soda purchases at movie theaters or restaurants.  For the 3 months ended Jul 1, EPS was 44¢.  A year ago, it was 61¢.  The stock gained 73¢.
If you would like to learn more about
WMT, click on this link:
club.ino.com/trend/analysis/stock/WMT?a_aid=CD3289&a_bid=6ae5b6f7

Coca-Cola’s earnings top expectations as sales volume recovers from pandemic 

The profit warning from WMT (which represents a lot of the US economy) & recession comments from IMF suggest the rest of the week will be a very difficult time for the stock market.  Also when the Fed speaks tomorrow, everybody will listen.

Dow Jones Industrials

 






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