This week’s newsletter by Miles Oddland, Head of News at Yahoo Finance. Follow him on Twitter @employee and on linkedin. Read this and more market news on the go with Yahoo finance app And subscribe to Yahoo’s morning financial briefing here.
Consumers continue to trade in by shopping at Wal-Mart (wmt).
On the The company’s recent earnings callWalmart CEO Doug McMillon noted that more than half of the company’s market share gains in the most recent quarter came from high-income shoppers.
The company also noted that spending on groceries continues to be a larger portion of overall sales because what it called “stubborn” inflation in the grocery aisle is eating away at household budgets.
The obvious economic reading of this trend is that consumers are feeling less confident otherwise strong data may suggest. As the largest retailer — and largest private employer — in the country, what happens at Wal-Mart doesn’t stay at Wal-Mart, economically speaking.
On the other hand, prof A great story this week from the Bloomberg Economics team About wage growth and how the outlook has changed has us wondering if Wal-Mart’s comments are less dire than they seem.
As one business owner told Bloomberg regarding restaurant wages that went from $12 an hour before the pandemic to $17 an hour today: “You’re never going to cancel that bell.”
For shoppers, the same can be true.
As a bit swelled last year, Most notably in the pumpFor the first time in two generations, consumers across income groups found themselves looking for ways to make real savings in the non-negotiable part of the household budget: food.
like Reducing inflation pressuresor Wage gains continueor economic confidence generally returns, we wonder if the higher earners who shop at Walmart are content to simply carry those savings in the grocery aisle and apply them elsewhere.
Yahoo Finance Brooke De Palma noted This week, spending in restaurants and bars continued to grow as experiences returned in favor of fading pandemic fears.
No matter how big or small your paycheck is, nobody likes to spend more than they have to. This may be the bell that Wal-Mart rang for groceries during the pandemic. And the company the company continues to call today.
Three big topics this week
He told Jeffrey Gundlach that Yahoo Finance stock is still in a bear market
Yahoo’s Executive Finance Editor Brian Suzy sat down with DoubleLine Capital CEO Jeffrey Gundlach this week, and among other things from a wide-ranging conversation Gundlach reminded viewers that the US stock market is in a “protracted bear market.”
“It really started in the last quarter of 2021,” Gundlach said. “[It’s] Very negative for the stock market when you have interest rates rising against these valuations, especially real interest rates.”
Find out more about the top takeaways from his discussion here.
“Garbage” collects under pressure
This week, Yahoo Finance’s Jared Blaker and Julie Hyman take a look at this year’s market rally and the specific trade that appears to be at risk — the so-called “garbage” stocks.
As Julie noted, the basket of stocks favored by retail investors that Goldman Sachs tracks has outperformed this year. RBC’s similar basket of what it calls “garbage” stocks, or those defined by negative cash flow, net losses, and net debt — many of which were favored during the pandemic — also outperformed the market.
But as RBC’s Amy Wu Silverman told Yahoo Finance, the underlying picture for many of these names hasn’t changed. “These low-quality names are still facing a very harsh environment,” Wu Silverman said.
Names like Carvana (CVNA), Bed, Bath & Beyond (BBBY), and C3.ai (AI) lagged behind the Nasdaq this week.
Nvidia to the rescue?
On the other side of a hot trade losing steam this week was Nvidia (NVDA).
The chip giant reported after-hours results Wednesday that beat expectations, and shares rose more than 14% during Thursday’s trading session. During Thursday’s close, the stock is up 61% year-to-date. from its recent lows in October. 2022, NVDA doubled down.
After navigating the recent challenges of a downturn in cryptocurrency-related spending on chips and renewed caution in the tech industry, Nvidia is now taking advantage of a newfound love for artificial intelligence and the computing power needed to meet the industry’s future.
“Artificial intelligence is at an inflection point, as it is poised for widespread adoption to reach every industry,” Nvidia CEO Jensen Huang He said this week. “From startups to large corporations, we are seeing accelerating interest in the versatility and capabilities of generative AI.”
planner of the week
Warren Buffett will issue his latest annual letter to Berkshire Hathaway shareholders on Saturday morning. By far, Apple (AAPL) is the largest holding of Berkshire’s stock portfolio.
At the end of last year, the tech giant accounted for nearly 40% of Berkshire’s stock portfolio. in 2021 Message to shareholdersBuffett called Apple one of the “Four Giants,” and noted that its 5.55% ownership of the iPhone maker saw Berkshire take a $785 million dividend and an unrealized $5.6 billion cut from Apple’s earnings.
“Apple’s brilliant CEO Tim Cook quite appropriately considers users of Apple products his first love,” Buffett writes, “but all of his other classes also benefit from Tim’s managerial touch.”
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