Traders work at the New York Stock Exchange (NYSE), on July 25, 2022.
Brendan McDermid | Reuters
Here are the most important news investors need to start their trading day:
1. Stock futures slide
US stock markets were set to fall on Tuesday morning after Walmart cut its profit outlook on Monday (see more below), sending shockwaves through the retail sector. The stock has shown signs of life in recent weeks, but remains on shaky ground after a terrible first half of the year. The major indexes were mixed on Monday, with the Dow up, the S&P 500 effectively flat and the Nasdaq down. The busy earnings schedule also continues. General Motors, McDonald’s and Coca-Cola reported before the bell on Tuesday. Alphabet, Microsoft and Google parent Chipotle will announce after the market closes. Investors will also watch for new economic data on Tuesday morning: May’s Case-Shiller home price index will be released at 9 a.m. ET, while consumer confidence and new home sales data will be released at at 10 in the morning.
2. Walmart Warning
Walmart Rollback price signs are displayed as customers shop during the grand opening of a new Wal-Mart Stores location in Torrance, California.
Patrick Fallon | Bloomberg | Getty Images
Walmart, the largest U.S. retailer and grocer, gave recession-worried people another reason to worry when it cut its profit guidance after Monday’s bell. Shoppers, the company said, were spending more on essentials like groceries, which typically have low profit margins, and avoiding items like electronics. Walmart, in turn, is cutting prices on merchandise that piles up on shelves, such as clothing, which is also hurting its bottom line. The company’s shares fell. The warning also affected other retailers, including Target and e-commerce behemoth Amazon. Shares of both companies also declined in after-hours trading.
3. McDonald’s and Coca-Cola report
The McDonald’s logo is seen at a restaurant in Arlington, Virginia on January 27, 2022.
Joshua Roberts | Reuters
Two major consumer companies reported their quarterly results on Tuesday morning, giving investors a taste of how people are struggling with high inflation. Coca-Cola beat analysts’ estimates in its top and bottom-line results as it raised prices to offset higher costs in things like freight, aluminum and corn syrup. McDonald’s, meanwhile, said same-store sales rose 3.7 percent in the U.S., beating StreetAccount estimates of 2.8 percent. The increase was largely due to some price increases and the popularity of its value offerings, McDonald’s said.
4. The supply chain sees GM
Signs advertising Buick and GMC, brands owned by General Motors Company, are seen at a car dealership in Queens, New York, on November 16, 2021.
Andrew Kelly | Reuters
General Motors posted earnings on Tuesday that fell short of Wall Street expectations. The Detroit automaker said parts shortages prevented it from shipping nearly 100,000 vehicles in the most recent quarter. The company, however, maintained its profit outlook for the year. GM is also preparing for a possible recession, according to CEO Mary Barra. “We have also modeled many downside scenarios and are prepared to take deliberate action when and if necessary,” it said in a statement. Crosstown rival Ford is scheduled to report results after the bell on Wednesday.
5. The Fed’s two-day meeting begins
Federal Reserve Chairman Jerome Powell reacts as he testifies before a Senate Banking, Housing and Urban Affairs Committee hearing on the “Semiannual Monetary Policy Report to Congress,” on Capitol Hill in Washington, DC, USA, June 22, 2022.
Elizabeth Frantz | Reuters
While they digest a flurry of earnings reports this week, investors will be locked into what the Fed says on Wednesday afternoon, following the conclusion of its two-day meeting. Most expect the central bank to raise rates by 75 basis points (each basis point equals 0.01 percentage point), but with inflation still rising, market watchers are looking for clues as to what Chairman Jerome Powell and the his political colleagues. “I think it’s going to be a mixed bag. It’s going to talk before what could be another quarter of real GDP decline,” Vincent Reinhart, chief economist at Dreyfus and Mellon, told CNBC.
CNBC’s Sarah Min, Melissa Repko, John Rosevear, Amelia Lucas and Ian Krietzberg contributed to this report.
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