94 views

Earnings and Economic Data in Focus

Earnings and Economic Data in Focus

Stock Market Today 

All three major averages increased throughout the daily trading session, which led to a modest decline in U.S. stock futures on Tuesday morning.

Futures for the Dow Jones Industrial Average remained unchanged. The 30-stock index finished above its 200-day moving average on Monday for the first time since late April. Futures for the S&P 500 and Nasdaq 100 both decreased by 0.12%.

Energy and financials first caused markets to decline at the start of normal trading on Monday due to poor economic indicators from China and the revelation that the nation’s central bank had unexpectedly lowered interest rates. Consumer discretionary, communication services, and consumer staples sectors rose later in the day, helping the markets recover and become positive.

Earnings 

Major retailers are scheduled to report in the upcoming week, giving investors additional earnings announcements to look forward to. Tuesday’s earnings announcements are expected to come from Home Depot and Walmart. On Wednesday, Target and Lowe’s will release their quarterly earnings. 

It is feared that consumers would spend less due to rising interest rates and inflation. How will that affect Walmart’s guidance, if at all? Even Walmart has seen supply chain interruptions and rising input costs.

The firm has decreased its full-year profits projection by a dollar since the beginning of the year. Lower profit expectations have impacted the stock price, which is down 20% from its 52-week highs of over $160. The stock has lost 11% of its value over the past year, underperforming the S&P 500 index’s 7% loss. Even if rate increases were expected, investors are still considering how they would affect consumer spending and, possibly worse, a recession.

U.K. Data 

For quite some time, we have maintained that the U.K. would enter a recession. A decline is now more likely due to the recent, unrelenting rise in gas prices and the euro area’s outlook. Our revised baseline assumes a peak-to-trough GDP decrease of 1% in the fourth quarter of 2022, even with significant budgetary assistance from the incoming Prime Minister, who we anticipate will be Rishi Sunak.

The inflation rate is anticipated to peak at 12.7% in October, up from our June prediction of 10.5%. We have estimated a 75% increase in October, 20% in January, and 5% in April based on the revised calculating technique for Ofgem’s energy price ceiling. From 3Q23, the cap then retreats.

New data on unemployment and salaries in the United Kingdom for June will be released today, and new inflation figures for July will be released tomorrow.

It may be good that unemployment is so low given the continually growing costs on a monthly basis, but it doesn’t imply it can’t decrease more. The U.K. labour market has been highly constrained in recent months, with hundreds of thousands of available positions.

The fact that fewer people are employed today than there were before the epidemic is likely less well publicised. However, there is indication that people who opted to retire early are re-entering the workforce out of need as the cost of living rises. Despite this, there is no sign that it is driving up wages, which is unexpected considering how intense inflationary pressures have been and are likely to remain.

After the May unemployment report revealed that hiring in those three months increased by 296k, even if the rate remained stable at 3.8%, we have already begun to see signs of a return to the workforce. For the three months leading up to June, this trend is anticipated to be slightly moderate to 268k.

A minor increase in weekly earnings from 4.2% to 4.3% for the same timeframe is encouraging, but it does not have the desired effect on salaries. For the three months ending in June, a rise to 4.5% is anticipated.