Walmart’s second-quarter sales were stronger than expected, boosting optimism that a U.S. recession may very well be averted. This was quite the alternative of what Home Depot told investors a while ago. The excellent news from the world’s biggest retailer helped restore confidence amongst investors and other analysts.
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Walmart – probably the most effective gauge of American spending, because it took one dollar in every twelve spent by shoppers in U.S. stores in the course of the quarter – announced that sales went up 4.2% within the quarter to June. These results were a lot better than expected, and the corporate’s shares rose by 6% in early trading. That rally follows greater than 30% year-to-date gains in Walmart’s shares, which generally set the tone for the broader economy.
Walmart CEO Doug McMillon further instilled confidence in retailer performance and the general economic outlook on an earnings call with analysts. “We’re not seeing a weaker consumer overall,” he said, stating that buyers can still spend resiliently despite ongoing economic challenges.
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He also emphasized that Walmart can maintain strong sales without slowdowns in other industries. The higher-than-expected consequence has led the corporate to extend its expectations for the rest of the 12 months, underpinning confidence within the U.S. economy’s capability to avoid a downturn.
That Walmart news was timely and gave the stock market a much-needed boost, with the S&P 500 gaining 1.5% and the Nasdaq surging 2.3%. Investors are optimistic that the economy can bounce back, and a few analysts speculate that the Federal Reserve will cut rates of interest as early as September. The potential for rate cuts added to the momentum of the market’s trajectory, provided that lower rates of interest would support the economy.
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“We’re back to an environment where excellent news is nice news and bad news is bad news,” said Bret Kenwell, an analyst at eToro. He noted that while investors and consumers cheer for lower inflation, it shouldn’t come at the associated fee of the economy.
Kenwell added that robust retail sales – tempering fears of an imminent recession – might give the Fed more time before deciding on rate cuts. He mentioned that the Fed is walking a tightrope between fighting off inflationary pressures and boosting economic growth.
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In marked contrast, Home depot issued a less encouraging report, warning that sales slid 3.6% within the last quarter as a consequence of fears of accelerating rates of interest straining consumers. The house improvement giant attributed the bad performance to consumer pullback in renovation spending. An earlier warning from Home Depot had added to fears of a possible recession within the U.S. economy, with higher borrowing costs and tighter budgets straining consumers. Those fears, though, have been eased by the upbeat figures from Walmart and data on recent jobless claims.
In line with the Commerce Department, U.S. retail sales surged by 1% in July – the biggest since January 2023 – with gains in autos, electronics, and appliances. This means that the everyday American consumer was perhaps more resilient than some had feared.
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This text Walmart Just Dropped a Major Hint: Is A U.S. Recession Closer Than You Think? Home Depot’s Dire Warning Adds Fuel To The Fire originally appeared on Benzinga.com
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