Inflation Strikes America’s Largest Retailers – Closing Bull May 20th, 2022

Quick Summary:

In this week’s Closing Bull, we’ll be discussing the market value of the S&P 500. The current state of the Nasdaq Composite. America’s largest retailers, Target and Walmart eating inflation costs. Energy is remaining at a record high. Tesla gets removed from the S&P ESG for lack of a low-carbon strategy, and finally an interesting fact.

Let’s get into the news.

Key News This Week:

Market recap

S&P 500 sheds trillions in market value

The Nasdaq Composite ended up in a bear market

Target and Walmart eat inflation costs

Energy remains at a record high

Tesla removed from the S&P ESG for lack of a low-carbon strategy

Interesting fact

Read the Transcript

Hi and welcome to my financial markets’ re-cap for the week.

Another rough week for the market, 7 straight weeks of losses for the benchmark. 

I was in a trade and it was flying higher before Wednesday’s big drop. Therefore, I ended up with a small loss on Thursday this week only to see the market crater again today.

I have a feeling that next week will see a recovery, but it’s a bit of a crazy train right now. Let’s see what next week brings.

That was the system update, what is happening in the news?

Well, the headlines today were about the S&P 500. It has shed more than $7 trillion in market value since the start of 2022. The index flirted with a bear market this week before finally printing prices below the official level of 20% below its last all-time high in January this year.

The Nasdaq Composite is already in a bear market and today hit below a 30% decline so far in 2022. The Indexes are super oversold now and a bounce is coming shortly I think.

In earnings news, Target to Walmart, America’s largest retailers are eating inflation costs to stay ahead — and their earnings reflect it.

Target’s stock plunged 27% on Wednesday on its worst day since Black Monday in 1987!

Earnings reported a take-home of just $1.3B last quarter compared to $2.4B a year earlier. Despite high inflation, Target’s trying not to raise customer prices this year. And it seems that Walmart is doing the same in a fine balance to keep its customers shopping.

The bottom line is shrinking earnings have emerged as a theme for the US’s largest retailers. On Tuesday, Walmart reported that its quarterly profit shrank 25% from last year.

Energy costs remain close to or at record highs: Canadians in most parts of the country are dealing with prices either above $2 a litre or creeping close to that benchmark. Crazy when you think they could barely even give it away in 2020.

And this wee Tesla was kicked off the S&P’s ESG (environmental, social, governance) index as part of its annual rebalancing, partly because of the EV leader’s “lack of a low-carbon strategy.” Exxon remains in the index. Go figure! Apparently, Elon was none too pleased and was complaining via Twitter On Wednesday. Although there are other revelations he is dealing with now which I won’t go into.

Interesting fact this week:

Because of Covid lockdowns, not a single car was sold in Shanghai last month. Hopefully, things are getting better there.

That’s it from me, It’s Friday, time to down tools, thanks for watching, and bye for now.

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