Wall Street’s major indexes fell at the open on Tuesday after Walmart’s profit warning heightened fears in the retail sector that consumers were cutting back on discretionary spending in the face of rampant, decades-high inflation.
Reuters:
Walmart Inc’s shares slumped 9.5% in premarket trading, while Target and Amazon.com 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.”
Along with high inflation, a stronger dollar is also expected to weigh on profits of companies with sprawling global operations.
High-growth companies such as Apple Inc, Netflix Inc, Tesla Inc, fell between 0.2% and 1%, while Alphabet Inc and Microsoft Corp dropped about 0.2% each ahead of their quarterly reports after market close.