Walmart’s inflation warning shook Wall Street which closed with heavy losses

Operators work on the floor of the New York Stock Exchange (Reuters / Brendan McDermid)

US stock indexes fell on Tuesday after lowering earnings expectations from… Walmart Will increase concerns in the retail sector of consumers Reduce discretionary spending Highest inflation rate in decades.

According to preliminary data, the Standard & Poor’s 500 It lost 46.31 points, equivalent to 1.17%, to close at 3,920.53 units, while it lost Nasdaq It lost 220.09 points, or 1.88%, to settle at 11,562.58 points. Industry average daw Jones It fell 235.98 points, or 0.74%, to 31,754.06 units.

Walmart , The largest supermarket chain in the United States, On Monday it lowered its earnings forecast for the current quarter and its entire exercise due to the impact of inflation in consumer spending.

And the company warned in a note that “food inflation is in the double digits” and that this “It affects customers’ ability to spend across general product categories and to demand more write-offs for moving inventory, particularly on apparel.”

“This is what happens when inflation is high or when consumers have difficulty paying their bills” said Eugenio J. Aleman, chief economist at Raymond James. “People are starting to be very selective about consumption, so they are basically reducing discretionary purchases in favor of their needs.”

Along with rising inflation, a The strongest dollar Affect the profits of companies with global operations.

Walmart lowered its profit forecast and raised concerns in the retail sector about the impact of inflation.  (Reuters/Kamel Krzaczynski)
Walmart lowered its profit forecast and raised concerns in the retail sector about the impact of inflation. (Reuters/Kamel Krzaczynski)

Investors are still very concerned about the impact of inflation in corporate earnings and how it will affect American consumers. Although the financial affairs of Americans relatively solid Thanks to the savings accumulated during the epidemic, These savings are spent on rising gas and food prices.

US consumer confidence fell for the third month in a row In July, in the context of continued concern about the acceleration inflation and ascending interest ratesindicating a decline in economic growth at the beginning of the third quarter.

Major indices started posting solid gains last week, buoyed by better-than-expected corporate earnings reports. Lower yields in the bond market also helped ease pressure on stocks after expectations of an interest rate hike by the Federal Reserve drove yields higher for most of this year.

The central bank is expected to announce a rate hike of up to three-quarters of a percentage point on Wednesday, three times the usual rate. The central bank is waging a fierce campaign to curb high inflation for four decades. The expected rise will put the Fed’s reference rate in a range 2.25% to 2.5%, the highest since 2018.

Bond yields were mixed on Tuesday. The two-year Treasury yield, which tends to move according to the Fed’s forecast, rose to 3.04% from 3.02% late Monday. The 10-year yield, which affects mortgage rates, fell to 2.79% from 2.82%.

Investors have been waiting for the latest reports on Company results. Big tech companies Alphabet and Microsoft reported the results after the closing bell, while Meta, Apple and Amazon did later in the week.

(With information from Reuters and AP)

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