© Reuters. Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., July 21, 2022. REUTERS/Brendan McDermid

By Shreyashi Sanyal and Aniruddha Ghosh

(Reuters) -Wall Street’s major indexes were set to fall at the open on Tuesday after Walmart (NYSE:)’s profit warning heightened fears in the retail sector that consumers were cutting back on discretionary spending in the face of decades-high inflation.

Walmart Inc’s shares slumped 9.5% in premarket trading, while Target (NYSE:) and Amazon.com (NASDAQ:) fell 3.3% each, souring the mood in what is set to be the busiest week of the earnings season.

“It’s not a surprise, this is what normally happens when inflation is so high or when consumers are having trouble paying their bills,” said Eugenio J. Alemán, chief economist at Raymond James.

“People start to become very discriminating in consumption, so basically they reduce the purchases of discretionary items in favor of necessities.”

In a sign of rising pressure to shore up profit amid higher costs, ecommerce giant Amazon said in the run-up to its quarterly financial results it will raise fees for delivery and streaming service Prime in Europe by up to 43% a year.

Other retailers including Kohls Corp, Macy’s Inc (NYSE:) and Nordstrom Inc (NYSE:) fell about 5% each.

Along with high inflation, a stronger dollar is also expected to weigh on profits of companies with sprawling global operations.

The Conference Board data, due later in the day, is expected to show its consumer confidence index likely dropped 97.2 in July from 98.7 in the prior month.

Investors are also bracing for a widely expected 75 basis-point interest-rate hike by the Federal Reserve at the end of its two-day policy meeting, which gets under way later on Tuesday, followed by comments from Chairman Jerome Powell.

At 8:33 a.m. ET, were down 117 points, or 0.37%, were down 13.25 points, or 0.33%, and were down 52.75 points, or 0.43%.

Among the Dow components, Coca-Cola (NYSE:) Co gained 1% after the company raised its full-year revenue forecast, while McDonald’s Corp (NYSE:) beat quarterly comparable sales expectations, sending its shares up 0.5%.

3M Co rose 4% after the industrial giant said it plans to spin off its healthcare business.

General Electric (NYSE:) Co gained 4.8% after the U.S. industrial conglomerate beat its revenue and profit estimates led by strong growth in its aviation business.

General Motors Co (NYSE:) fell 1.6% after reporting a 40% drop in its quarterly net income and said it was curbing spending and hiring ahead of a potential economic slowdown.

High-growth companies such as Apple Inc (NASDAQ:), Netflix Inc (NASDAQ:), Tesla (NASDAQ:) Inc, fell between 0.2% and 1%, while Alphabet (NASDAQ:) Inc and Microsoft Corp (NASDAQ:) dropped about 0.2% each ahead of their quarterly reports after market close.

Earnings from companies are expected to have risen 6.1% for the second quarter from the year-ago period, according to Refinitiv data.

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