Jump slightly, but Wal-Mart stumbles

Wall Street rose on Tuesday, following strong consumer sentiment, despite disappointing profits from Wal-Mart. The S & P 500 rose 0.82% to 4,041 points, the Dow Jones rose 0.46% to 32,380 points, and the Nasdaq rose 0.95% to 11,774 points. The barrel of WTI crude rose 0.5% to $ 112.4. One ounce of gold rose 0.3% to $ 1,820. The dollar index fell 0.7% against a basket of currencies. Bitcoin is held for $ 30,000.

US retail sales showed resilience in April. In line with FactSet’s consensus, it increased by 0.9% compared to the previous month, compared to 0.3% consensus by 0.6% excluding automobiles. Excluding vehicles and gasoline, consumption increased 1% month-on-month and market consensus was 0.8%.

According to the Fed on Tuesday, US industrial production in April 2022 increased 1.1% from the previous month, with a consensus of 0.4%. Manufacturing production increased 0.8% against a market consensus of 0.3%. The occupancy rate was 79%, but the consensus was 78.6% and the previous month was 78.2%.

The National Association of Home Builders’ May 2022 US Home Market Index was 69, but a month ago the market consensus was 75 and 77.

Corporate inventories in March 2022, also revealed, rose 2% from the previous month against a market consensus of 1.9%.

Is the Federal Reserve in the process of recessing the US economy, forced to raise interest rates at a substantially accelerated pace in up to 40 years to combat inflation? I need to ask a question. Elon Musk yesterday determined that the United States was probably already in recession. “These things are gone and the boom will come again,” Musk said at the Miami Beach “All-in” Summit. “Probably one year, maybe 12 to 18 months will be difficult.”

The US economy shrank at an annual rate of 1.4% in the first quarter, but this weakness was primarily due to record trade deficits. Bloomberg reports that the Atlanta Federal Reserve’s GDP Now estimates that gross domestic product will currently increase at a rate of 1.8% in the second quarter.

Concerns about a recession have recently increased as the Federal Reserve tightens monetary policy to curb inflation, which is nearing its highest pace since the early 1980s, according to Bloomberg’s latest monthly survey. Of an economist.

Mohamed A. El-Erian, a former Pimco boss, says the list of former Fed officials is growing, pointing out that monetary policy mistakes and initial reactions are too slow. Therefore, Ben Bernanke decided that he needed to act early in the face of inflation. El-Erian says the Fed now believes it can achieve a modest economic landing, but it was already wrong to judge temporary inflation.

Patrick Harker, Charles Evans, Loretta Mester, James Bullard, and especially Jerome Powell of the Fed will speak during the day. Mr Bullard said today that the Fed is “making the right plans” to curb inflation …

Federal Reserve Chair Powell will speak at a live event in The Wall Street Journal. It should confirm that the Fed is primarily focused on inflation. He is also expected to repeat the Fed’s forecast of a 50 basis point rate hike at the next two meetings, with a rapid push to neutral rates and the possibility that the central bank will push interest rates back into restricted areas. Justified. The market may be most interested in Powell’s view of the impact, even with the recent decline in risk assets. So far, Fed officials have not expressed concern about this issue. They also expressed their desire to see further tightening of fiscal conditions. Other topics of interest revolve around balance sheet size and whether Powell is beginning to see signs that inflation may have peaked.

Goldman Sachs lowered its 2022 US GDP forecast this weekend from the previous 2.6% to 2.4%, and 2023 GDP from the previous forecast of 2.2% to 1.6%. GS cites a tightening of fiscal conditions. Slow growth can also reduce job vacancies and increase unemployment, but investment banks have rejected the idea of ​​excessive deterioration. Tight financial conditions have hampered short-term consumer spending, and low consumer confidence over the last decade suggests that this could continue until June. As a result, GS reduced its second quarter GDP estimates from the previous 2.9% to 2.5%.

Morgan Stanley, on the other hand, believes that margin compression and slowing earnings growth could slow earnings growth in the future.

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Walmart stumbles 9% on Wall Street. Mass-market American leaders were just disappointed in the first fiscal quarter of 2023, and inflation affected their profitability. In addition, the Arkansas Group is reducing its estimates. Retailers’ net income for the closing quarter was $ 2.05 billion, or 74 cents per share, compared to $ 2.73 billion, 97 cents per share, in the year-ago quarter. Adjusted earnings per share was $ 1.3, while FactSet’s consensus was $ 1.48. Revenues were $ 141.6 billion, compared to $ 138.3 billion and consensus of $ 138.8 billion in the year-ago quarter. The domestic growth rate in the United States was 3%, which was higher than expected.

“Profits are unexpected and reflect an unusual environment,” CEO Doug McMillon said in a statement. “Inflation levels in the United States, especially food and fuel, are putting more pressure on the combination of margins and operating costs than we expected.” E-commerce grows 1% and global advertising activity grows 30%. It has increased rapidly.

Wal-Mart expects consolidated net sales in the U.S. to increase by more than 5%, comparable sales excluding fuels to increase 4-5%, and earnings per share to be stable or slightly higher in the second quarter doing. Wal-Mart forecasts sales growth of 4% at constant exchange rates, a 3.5% increase in similar US sales excluding fuel, and a 1% decrease in EPS throughout the year. Sales and EPS forecasts for the full year do not include sales. FactSet Consensus predicts sales of $ 59.51 billion. This means 3.1% growth, 3.3% expansion in the US, and EPS of $ 6.75.

The Home Depot has lost 1% on Wall Street, but the American giant in the distribution of home appliances products has just raised its annual earnings forecast in the face of strong demand. Therefore, the Group expects similar growth of approximately 3% in fiscal year 2022, compared to the slightly positive performance previously expected. The consensus was 1.4% progress. Annual earnings growth per share is expected to be around 5%, which is also an upward revision. First-quarter net income, which ended in early May, was $ 4.23 billion, or $ 4.09 per share, compared to $ 4.15 billion in the year-ago quarter. Revenue improved 3.8% to 38.91 billion. Therefore, the group clearly exceeded quarterly profit expectations.

China’s e-commerce group JD.com lost 1% on Wall Street. However, JD took advantage of the blockade in China to boost online sales and group profits. LeiXu, general manager of the business, explains that the group is using his skills to support communities and businesses affected by Omicron. Excluding non-recurring items, quarterly earnings per share was 2.53 yuan per ADS, well above expectations. Revenues improved 18% to 239.7 billion yuan, about $ 36 billion. Service revenue surged 26%.

In particular, Take-Two (+ 9%), an American video game publisher known for GTA (Grand Theft Auto), outperformed the quarterly profit consensus, but profits were slightly shorter. Fourth-quarter net income, which ended at the end of March 2022, was $ 111 million, compared with $ 219 million in the year-ago quarter. Adjusted earnings per share was $ 1.09, but the consensus was $ 1.04. So while Take-Two has shown good resistance, Saudi Arabia’s public investment fund also doubled its equity stake in publishers last quarter. Quarterly online bookings increased by 8%, especially with the NBA 2K22 and GTAV, but lacking consensus.

The Group forecasts adjusted sales in the range of $ 700 million to $ 750 million against a $ 778 million consensus for the first quarter, which has just begun. Adjusted sales are expected to be between $ 3.75 billion and $ 3.85 billion throughout the year, which is also below consensus.

Twitter was still down 8.2% at $ 37.39 on Wall Street last night, and today’s session should still be turbulent. The title is currently producing about 1%. “20% fake account / spam, four times higher than Twitter’s claim could be much higher. My suggestion was based on the accuracy of Twitter’s SEC filing. Yesterday, Twitter’s CEO publicly said. Refused to show evidence (Note: fake and spam accounts)

Elon Musk may be looking for a better deal after proposing to buy Twitter for $ 44 billion, $ 54.2 per share. At an “all-in” technical conference in Miami on Monday, Musk said that 20% of platform users believe that they have fake or spam accounts, which may be the reason. .. Tesla’s CEO did not rule out that possibility. Adjustment of previous contract. Transactions were suspended by Mask for the time being while Mask was evaluating this level of fake accounts. The financial markets do not seem to rule out abandonment of the transaction, as the title is about 30% lower than the first offer.

Citigroup soared 7% at the beginning of the day on Wall Street on Tuesday, but Warren Buffett’s company Berkshire Hathaway has placed a new $ 3 billion bet on US banks. So, in the quarter that ended at the end of March, Berkshire took advantage of low prices to acquire nearly 3 billion shares of Citi, but the bank is in the process of restructuring under the leadership of its general manager, Jane Fraser. In contrast, Berkshire has finished investing in Wells Fargo for over 30 years. Buffett’s company also acquired shares in Celanese, McKesson, Allie Financial, and Paramount.

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