Domain Daily: Walmart's Warning

The Dose

  • Walmart Sees Weakening Consumer Spending

  • A Wall Street Legend Calls His Shot

  • GM Misses Earnings Expectations

Walmart Cuts Forecast for Second Half of the Year

The retailer warned investors that its Q2 earnings would fall short of expectations. The company cited weakening consumer demand as the reason behind its souring outlook.

The Point: We already knew that retailers were swimming in excess inventory. However, previously, retailers attributed the glut to changing consumer preferences. That's to say, Walmart and its competitors stocked up on products that people no longer wanted to buy. Now the big box store is saying that its customers just aren't spending like they used to due to the rising costs of food and gasoline. That's a statement that no investor should ignore. "The increasing levels of food and fuel inflation are affecting how customers spend, and while we've made good progress clearing hardline categories, apparel in Walmart U.S. is requiring more markdown dollars," said CEO Doug McMillon.  

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Research Analyst Yardeni Calls Market Bottom

Ed Yardeni, a noted stock market researcher, told Bloomberg that he believes the S&P 500 Index has already hit its low for the year.

The Point: Yardeni is a highly respected voice on Wall Street. When he talks, people listen. So it's notable that he's willing to go out on a limb and say that the worst of the bear market is over. Obviously, Yardeni doesn't have a crystal ball, and circumstances can quickly change. However, it's worth considering his outlook, particularly since his take is a contrarian one at the moment. "It's never easy to pick a bottom in the stock market, but I'm going to give it a try," Yardeni told Bloomberg TV. "The real question is going to be the earnings season, and so far the earnings season is going reasonably well. It has not really thrashed the stock market, and the stock market's held up quite well."  

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Parts Shortage Hits General Motors Earnings

The automaker missed Wall Street estimates for Q2 earnings because of a parts shortage.  

The Point: Supply chain bottlenecks continue to be an issue in the auto industry. GM said it had to delay nearly 100,000 deliveries due to its inability to secure parts. That's the bad news. The good news is GM is sticking to its forecast for 2022 earnings. That's a clear signal that the company expects supply chain issues to abate over the coming months.  

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*The content team responsible for the above content uses primary and secondary sources they believe to be accurate, which includes but is not limited to Bloomberg, The Wall Street Journal, Financial Times, and CNBC, among others. 

*Domain Money Advisors, LLC, an investment adviser registered with the U.S. Securities and Exchange Commission and an affiliate of Domain Money, has (as of this writing) the following assets mentioned in this communication as part of its managed portfolios: GM