Markets slide as Walmart's caution spoils the bullish mood

Dow dropped 450, decliners over advancers 4-3 & NAZ pulled back 93.  The MLP index wavered in the 325s & the REIT index gained 2+ to the 411s.  Junk bond funds were mixed & Treasuries saw more buying which lowered yields.  Oil edged higher in the 72s & gold rose 16 to 2952 (more on both below).

Dow Jones Industrials

Federal Reserve Bank of St Louis Pres Alberto Musalem said policy should remain “modestly restrictive” until it’s clear inflation is on track to the central bank’s 2% target, & that he sees increased risks that progress may stall or even reverse.  Musalem emphasized his baseline scenario is for inflation to continue to move toward 2% amid a solid labor market.  He noted, however, that upcoming changes in gov policy could have a material impact on the path of the economy.  “This baseline scenario requires that monetary policy remains modestly restrictive until inflation convergence is assured, at which point the policy rate can be gradually reduced toward the neutral level as convergence progresses,” Musalem added.  The neutral level refers to a policy stance that neither hinders nor promotes economic growth.  “Around this baseline scenario, the risks of inflation stalling above 2% or moving higher seem skewed to the upside,” he continued & added the risk that inflation could stall is greater than that of a significant weakening in the labor market.  Speaking to reporters after his speech, Musalem said he'd like to see inflation making downward progress “consistently.”  Fed officials held the central bank's benchmark interest rate steady at their Jan meeting & have signaled a willingness to remain on hold until they see inflation cool further.  Minutes of that meeting also showed policymakers are considering the potential for changing government policies to hinder inflation progress.  Pres Trump is implementing an economic agenda that aims to make drastic changes to US trade & immigration policy.

Fed’s Musalem Sees Increased Risk of Inflation Stalling Above 2%

Mortgage rates fell for a 5th consecutive week, hitting the lowest level since Dec but remaining elevated near 7%.  Freddie Mac's latest Primary Mortgage Market Survey showed that the average rate on the benchmark 30-year fixed mortgage edged down to 6.85% from last week's reading of 6.87%.  The average rate on a 30-year loan was 6.9% a year ago.  "The 30-year fixed-rate mortgage has stayed just under 7% for five consecutive weeks and in that time has fluctuated less than 20 basis points," said Sam Khater, Freddie Mac's chief economist. "This stability continues to bode well for potential buyers and sellers as we approach the spring homebuying season."  The average rate on the 15-year fixed mortgage fell to 6.04% from 6.09% last week.  1 year ago, the rate on the 15-year fixed note averaged 6.29%.

Mortgage rates fall for fifth week in a row, hover near 7%

Amazon (AMZN) has dethroned Walmart (WMT), a Dow stock & Dividend Aristocrat, in quarterly revenue for the first time.  AMZN said earlier this month that it brought in $188B in revenue during the 4th qtr.  That beat out WMT's sales for the period, which came in at $181B.  Since 2012, WMT has held the distinction of being the top revenue generator each qtr, a title it gained after overtaking oil giant Exxon Mobil (XOM), a Dow stock & Dividend Aristocrat.  WMT still leads the way in annual sales, though AMZN is gaining ground.  WMT is projected to reel in $708B in the fiscal year ahead while AMZN's full year revenue for 2025 is expected to reach $700B.  AMZN's core retail unit remains its biggest revenue generator, but its top line is also being fueled by its massive cloud computing, advertising & seller services businesses.  3rd-party seller services, which includes commissions & fees collected by AMZN on fulfillment & shipping, advertising & customer support, accounted for 24.5% of company sales last year.  Amazon Web Services was responsible for nearly 17%.  WMT has looked to its chief rival for ways to sustain sales growth.  The company operates a 3rd-party marketplace & offers sellers fulfillment services, although both businesses are a fraction of the size of AMZN's.  WMT has also launched an advertising business & a loyalty program for shoppers, called Walmart+, that competes with Amazon Prime.  AMN stock fell 3.72 & WMT stock dropped 6.79 on its earnings report & guidance for its new year.  

Amazon surpasses Walmart in revenue for first time

Gold climbed to a new all-time high, just a stone's throw away from the $3000 level against a backdrop of ongoing geopolitical & tariff risks, as well as indications from Pres Trump that the US intends to verify how much gold it has stored.  Gold futures touched an intraday high just beyond $2973 per ounce before paring gains, while cash market gold surpassed a record $2954 an ounce.  The surge comes amid concerns of an escalating trade war after Trump announced he intends to impose levies on autos, semiconductors & pharmaceutical products.  Uncertainty over attempts at a deal to end the Ukraine-Russia war also helped send the price of bullion higher.  Yesterday, Trump insinuated dropping support for Ukraine, saying Pres Volodymyr Zelensky "better move fast" on a peace agreement "or he is not going to have a country left."  His comments about verifying how much gold the US has stored in Fort Knox may also be fueling speculation of higher gold prices.  "We're going to go to Fort Knox — the fabled Fort Knox — to make sure the gold is there," Pres Trump told reporters.

Gold climbs to new high as buyers hedge against Trump tariff plans

Oil prices were little changed after rising to a near 1-week high in the previous session, as an industry report showing a buildup in US crude stockpiles pressured the market.  Brent futures were up 34¢ (0.5%) at $76.38 a barrel & US West Texas Intermediate crude rose 26¢ (0.4%) to $72.51.  US crude stocks rose by 3.34M barrels last week, market sources said, citing American Petroleum Institute.  Oil prices edged lower today because of the stock build in the US.  The market continues to lack a clear direction, with supply disruptions in Kazakhstan & the OPEC+ production increase delay being offset by global demand worries.  Separately, Russia said Caspian Pipeline Consortium oil flows, a major route for crude exports from Kazakhstan, were reduced by 30%-40% on Tues after a Ukraine drone attack on a pumping station.  A 30% cut would equate to the loss of 380K barrels per day of market supply.  However, other factors & potential boosts to oil supply added to concerns about prices.

Oil little changed after US crude inventory build

Stocks pulled back as investors scrutinized Walmart's (WMT) outlook & assessed the impact of Pres Trump's planned tariffs & policy shifts.  Worries grew about coming headwinds for corp America after WMT beat on quarterly profit, but issued cautious 2026 fiscal year guidance.  Gold continue to reach new records as investors lost appetite for risk.