A trader operates on the trading floor of the New York Stock Exchange (NYSE) in New York, August 3, 2022.
Andrew Kelly | Reuters
Here are the key news items investors need to start their trading day:
1. Stock futures fall
Shares emerged on a rough Wednesday morning, a day after the Dow and S&P 500 ended higher. All three major indices were in the red before the bell. The Dow is on a five-day winning streak, while the S&P is looking for its fifth straight week of gains. Investors processed Target and Lowe’s earnings on Wednesday, a day after Walmart and Home Depot released their results. They also look forward to the Federal Reserve releasing the minutes of its previous meeting as the central bank considers its next steps to fight inflation.
2. Inventory Reduction Presses Target Profit
Shares of Target closed more than 4% higher on Tuesday after big-box rival Walmart delivered better-than-expected results and stuck to its forecast for the second half of the year. On Wednesday, however, Target reported earnings well below Wall Street expectations, even though earnings were in line with forecasts. Executives said they’d rather take a big short-term bottom-line hit than stretch the pain over time as it looks set to unload piles of unwanted merchandise before the holidays. However, Target stuck to its full-year forecast and said it is in a better position to recover.
3. Walmart CEO: Squeezing Everyone’s Money
Speaking of Walmart, the nation’s largest retailer and grocer is also struggling with inventory surplus in some categories, but is benefiting from grocery sales and an influx of new customers. With inflation at its highest point in 40 years, more families with incomes of $100,000 or higher are shopping at the discounter, the company said. “People are really price-oriented now, regardless of income level,” Walmart CEO Doug McMillon told CNBC’s Courtney Reagan on Tuesday. “And the longer this goes on, the more that will be the case.”
4. Mortgage demand falls
Rates have fallen from their highest point, price growth has slowed and sales are cooling, but that doesn’t mean people are jumping back into the housing market. The Mortgage Bankers Association said on Wednesday that mortgage demand hit its lowest level since 2000 last week. Fewer people are also refinancing their mortgage, as rates are almost double where they were early this year. The report Wednesday comes on the heels of new studies showing more people are pulling out of deals to buy homes.
5. New Amazon Union Efforts
Amazon workers at the LDJ5 Amazon warehouse meeting in support of the union on April 24, 2022 in Staten Island, New York. The union vote on LDJ5 was defeated on May 2, 2022.
Andrew Lichtenstein/Corbis via Getty Images
Labor organizers at an Amazon warehouse near Albany, New York, filed a petition to form a union. The workers want to be represented by the local Amazon Labor Union, which previously unionized in an Amazon warehouse on Staten Island. The e-commerce giant, which relies on workers in its network of massive warehouses to quickly distribute products to customers, is fighting union efforts in several facilities, including in Alabama and Kentucky.
— Tanaya Macheel, Melissa Repko, Diana Olick and Annie Palmer of CNBC contributed to this report.
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