Wall Street subway station in New York (AFP/Angela Weiss)
The New York Stock Exchange ended lower on Tuesday, worried about the loss of momentum among consumers affected by inflation, on the eve of a new rate increase by the American Central Bank.
According to the final closing results, the Dow Jones index lost 0.71% to 31,761.54 points. The Nasdaq fell 1.87% to 11,562.57 points and the S&P 500, the most representative of the American market, lost 1.15% to 3,921.05 points.
Warnings from Walmart, the nation’s largest retailer, have been chilling. The American supermarket chain significantly lowered its quarterly and annual profit forecasts on Monday night, as customers were forced to spend more on food and turned away from higher-margin items.
Walmart stock fell 7.60% to $121.98, not far from its lowest since the Covid-19 pandemic.
Rising food and fuel prices are shifting consumer budgets, forcing retailers to run promotions, stock more unsold items and postpone orders.
“While the market may have already priced in the Fed’s interest rate hike” expected on Wednesday, “it is clearly not pricing in the company’s earnings surprises”, summed up for AFP Maris Ogg, of Tower Bridge.
“Apparently, the consumer is weaker than we thought and in addition, retailers do not have goods on their shelves,” added the portfolio manager.
“My clients are wealthy, but now they are nervous because of the stock market, because of inflation, and because of the consumer base,” he continued.
– Trade is impaired –
The titles of other retailers decreased such as Target supermarkets (-3.62%), the low-cost chain Dollar Tree (-6.29%) or the semi-wholesale Costo (-3.25%). Amazon, the number one in online distribution, was not neglected (-5.23%).
One of Wall Street’s darlings, Shopify, the platform for online retailers, based in Canada, fell 14% to 31.55 dollars after announcing the layoff of 10% of its staff, or 1,000 people.
The company, whose stock rose to $213 in November 2021 at the height of the pandemic and online shopping, gave a culpa to the expectations of the growth of e-commerce, “whose bet did not work. paid statement”, recognized its founder.
In other bad news on the economic data front, “the consumer confidence index published by the Conference Board in July fell for the third consecutive month”, said analysts at Wells Fargo.
But mainly the technology-dominated Nasdaq weighed on the market, awaiting the results of Google (Alphabet) and Microsoft, which were announced after the close.
“When you have a session like today, people are like, ‘Wow, retail is bad, so what’s going to fall next?'” explained Maris Ogg. “That’s why we’re taking revenues from names that have been recurring in the past,” such as technology.
Alphabet (Google) thus ended up 2.56% to 105.44 dollars but the title rose after the close of electronic trading (+2.63%) after the announcement of its results.
Although with slow growth in terms of turnover and decline in terms of profit, the accounts of the web giant in the 2nd quarter were less disappointing than feared.
Microsoft, on the other hand, which closed up 2.68% to 251.90 dollars, continued to fall after closing (-1.15%) after results that were worse than expected.
The program of the Federal Reserve (Fed) on Wednesday, which is expected to raise interest rates for the fourth consecutive time, according to forecasts, added to the jitters in the market as the dollar rose, especially against the euro , amid a lackluster backdrop for the euro area.
An increase of 75 basis points is widely expected. Fed Chairman Jerome Powell will address a news conference as markets await signs of future rate moves.
Another sector that bled on Tuesday was cryptocurrencies. The Coinbase trading platform, further melted by 21% to 52,93 dollars after press reports that sparked the investigation of the police of the stock market, the SEC, in its exchanges. This is a new case after insider trading by members of its staff, revealed last week.
Bitcoin lost almost 6% to $20,886 while Ethereum lost 9.40% to $2,122.