US Market & WMT end on a Friday Low ?
On Thu, 15 May 2025, US stocks continued to close mostly higher, despite a blip in tech stocks, as investors go through retail sales data and $Wal-Mart(WMT)$ results for a snapshot of consumer health.
When trading day ended:
-
DJIA: +0.65% (+271.69 TO 42,322.75).
-
S&P 500: +0.41% (+24.35 TO 5,916.93).
-
Nasdaq: -0.18% (-34.49 to 19.112.32).
Rally’s Catalysts ?
(1) Producer Price Index (PPI) - April 2025.
US producer prices unexpectedly fell in April 2025 as “wholesale services prices” declined the most (-0.7%) since 2009.
It was “pulled” down by ebbing demand for air travel & hotel accommodation. (see above)
For April 2025, (see above)
-
Headline MoM inflation dropped -0.5%, after upward revision of March 2025 data from -0.4 to 0.0.
-
Annual headline inflation saw PPI at 2.4%, after upward revision of March 2025 data from 2.7 to 3.4.
US Market welcomed “falling” headline PPI and core PPI as signs of easing inflation, contributing to Thursday rally.
However, investors should not rejoice in April’s dataset.
This is because falling PPI was a result of weakening demand or in other words - “shrinking profit margins”.
This cannot be good for the longer term.
(2) US Retail Sales - April 2025.
After a surged in March 2025 retail sales, in anticipation of Trump’s tariffs hike, the sharp slowdown in April 2025 retail numbers was hardly a surprise.
US monthly retails sales fell by -1.6% to 0.1%, after an upward revision of March’s data from 1.4% to 1.7%.
Lest we forget, there are still (a) baseline taxes of 10% on most goods imported into US, (b) 25% on metals and (c) a 30% tax on Chinese imports.
Further analysis, saw wholesale prices for services like airline tickets and hotel rooms fell in April.
Other data also showed, “flagging softening”” demand.
This does not bode well for an anticipated rebound in Q2 2025 GDP, after US economy contracted in Q1 2025 for the first time in 3 years.
According to RSM US, Economist, Tuan Nguyen:
-
US tariffs are already causing people to spend less money.
-
Although a recession is not expected in 2026, because some tariffs were recently lowered.
-
There exists a higher probability that US economy will grow slowly for several quarters.
(2) US Weekly Jobless claims.
US initial jobless claims for week ending 10 May 2025, held steady at 229,000, US Labour Department said on Thu, 15 May 2025.. (see above)
Economists polled by The Wall Street Journal had estimated new claims would fall by -2,000 to 226,000.
(3) US Continuous Jobless claims.
A more pessimistic data though is the number of people already collecting unemployment benefits.
For week ending 03 May 2025, continuous jobless claims rose by +9,000 to 1.88 million.
Summary:
-
Although jobless claims remain relatively low, some economists think companies may be hoarding workers after having to scramble to find labour in the wake of the pandemic.
-
However, others worry the labour market may be weakening below the surface.
-
Looking ahead, a gradual (claims) climb higher still seems likely in the coming months.
According to Pantheon Macroeconomics, Snr US economist, Oliver Allen:
-
This as an uncertainty-driven pullback in hiring makes it harder for recently laid-off workers to find new roles.
Jerome Powell Speech.
Apart from the various economic reports out on Thursday, the other highlight of the day was Fed Chair Jerome Powell’s speech at the Thomas Laubach Research Conference in Washington, DC.
Below were essences in his speech:
-
Interest rates will probably stay higher & longer for a while because US economy is changing and Fed’s policies would also be shifting.
-
US may be entering a period marked by more frequent supply shocks, that create challenges for both inflation and employment management
-
The current environment complicates the Fed’s dual mandate of (a) promoting maximum employment and (b) stable prices.
This is reflected in mixed signals from recent economic data:
-
Retail sales.
-
Inflation - PPI and core PPI, capture demand and pricing pressures.
-
Labour market dynamics - as reflected in weekly jobless claims report.
Continuous recognition of US economic data-on inflation and labour market indicators-must be interpreted within a context of greater uncertainty and potential for persistent shocks, reinforcing Fed Chair’s call for a more (i) flexible, (ii) transparent, and (iii) adaptive approach to monetary policy.
Wal-Mart Quarterly Earnings.
Thursday also saw Consumer Staple giant Walmart released its quarterly earnings, that beat Q1 2026 earnings estimates but fell just short of sales expectations.
As per LSEG report:
-
Earnings per share adjusted (EPS): was $0.61 vs $0.58 expected vs Q1 2025’s $0.60, marking a +1.7% YoY gain.
-
Revenue: came in at $165.61 billion vs $165.84 billion expected vs Q1 2025’s $161.5 billion, a +2.5% YoY gain. (see below)
-
Net income: was marginally lower at $4.49 billion vs Q1 2025’s $5.10 billion; that is -11.96% YoY decline.
Walmart, CFO John David Rainey remarked:
-
Walmart is often seen as a barometer for the health of US consumer because of (a) its thousands of stores and (b) large customer base that cuts across age, income and region.
-
So far, Walmart has not seen a noticeable shift in consumer behavior from previous quarters.
-
Tariffs are “still too high”, despite the recently announced agreement to lower duties on imports from China to 30% for 90 days.
-
The magnitude of these increases is more than (1) any retailer can absorb and (2) any supplier can absorb.
-
There are genuine concerns that consumer is going to start seeing higher prices, likely towards the tail end of May 2025, and then certainly much more in June 2025.
Guidance.
-
Net sales for Q2 2026 are expected to increase 3.5% - 4.5%.
-
For EPS or operating income growth, Walmart declined to provide because of fluctuating US tariff policy.
-
Increasingly, major companies, (Walmart inclusive) have declined to provide earnings guidance for the current quarter due to ongoing economic uncertainty.
-
This included $United Continental(UAL)$, $United Parcel Service Inc(UPS)$, $Pepsi(PEP)$ etc..
-
Full-year forecast, that calls for (a) sales growth of 3% - 4% and (b) adjusted earnings of $2.50 - $2.60 per share remained status quo.
As expected, Wall Street did not take too kindly to marginally lower earnings and opaque current quarter guidance. Walmart closely lower at $96.35 on Thursday. (see below)
Will it be the same come weekend Fri, 16 May 2025 ?.
Must Read: Click on below titles to access. Repost to share, Like as encouragement ok. Thanks.
-
Do you think Walmart will continue to pull back on Friday OR end on a high ?
-
Do you think inflation will creep back into US stealthily by year end ?
If you find this post interesting, give it wings! ️ Repost and share the insights ?
Do consider “Follow me” and get firsthand read of my daily new post. Thank you.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
Pls "Re-post" so that more get to know. Tks! Rating is important (to me).
Consider "Follow me" and get first hand read of my Daily new posts? Thanks!). Tks!!
Nice!
Great read💭