Target, Walmart’s inflation warning bad omen for stocks, economy
Phil Blancato and Kevin Paffrath on how to navigate the stock market during record inflation on ‘Make Money.’
Walmart and Target, two of the country’s largest retailers, confirmed this week that the headwind of inflation is picking up.
“Consumer strengths will be tested as both Walmart and Target signal rising price pressures are not easing,” wrote Edward Moya, senior market analyst at Oanda.
TARGET’S RESULT NEAR HALF IN INFLATION
| Ticker | Safety | Last | Change | Change% |
|---|---|---|---|---|
| TGT | TARGET CORP. | 1[ads1]61.73 | -53.50 | -24.86% |
Target shares fell by 25% on Wednesday, the most since 1987, which contributed to the Dow Jones Industrial Averages’ 1,164.52 point slippage, pushing the benchmark index to its lowest level since March 2021.
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“Growth was challenged by unusually high costs, which resulted in profitability well below what we expected to be and where we expect to operate overtime,” Target CEO Brian Cornell said in the company’s earnings announcement on Wednesday. Adjusted earnings fell 40.7% compared to the same period last year to $ 2.10 per share.
The S&P 500 is also at its lowest level since March 2021, followed by the Dow Jones Market Data Group.
TOMORROW STANLEY RAISES RECESSION ODDS
The day before, Walmart shares were down 11%, also the worst day since 1987, after CEO Doug McMillon delivered a sober view.
| Ticker | Safety | Last | Change | Change% |
|---|---|---|---|---|
| WMT | WALMART INC. | 122.36 | -9.03 | -6.87% |
“On the food side, we see double-digit inflation, and I’m worried that inflation could continue to rise,” he said in response to a question about the dealer’s quarterly earnings. Adjusted earnings fell 23% to $ 1.30 per share.
Walmart CEO Doug McMillon ()
Overall consumer inflation reached 8.3% in April, a 40-year high, with food and fuel costs even higher. Annually, the price of unleaded gas is up 44%, eggs 22.6% and milk 14.7%, which is followed by the Bureau of Labor Statistics Consumer Price Index.
INFLATION OF 8.3% IN APRIL
“Rising costs combined with a decline in consumer spending, which accounts for about 70% of the US economy, could cement a US recession,” Jeff Sica of Circle Squared Alternative Investments told FOX Business.
“What we saw from these two major retail revenue reports is that the consumer is about to break and that the consumer is cutting back on spending unless confidence in the future indicates where we are headed, I think we are already in the recession, but it indicates that we are heading into a deeper recession, “said Sica.
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The US economy fell surprisingly 1.4% in the first quarter, another back-to-back dip, which would confirm a recession. At present, estimates for second-quarter economic growth remain at 2.4%, tracked by GDPNow, the Federal Reserve Bank of Atlanta’s real-time tracking.
