The week starting Monday, August 5, 2024, was the most volatile on Wall Street in recent years. By the end of the week, the market had stabilized after positive jobless claims data helped to cool attention. In the coming week, key economic data will give a clear picture of the US economy.
Economic Data Triggers Volatility
Panic swept across financial markets on Monday, August 5, 2024, after the Bank of Japan raised interest rates, leading to an unwinding of yen carry trades. The central bank raised interest rates to around 0.25% from 0% to 0.1%. Its decision came after the July jobs report that raised fears the US was headed for a recession.
Tensions cooled down later in the week as jobless claims came in better than expected. The result was that at the end of the week, the markets were mainly flat from their Monday opening. The S&P 500 ended that week nearly where it started, while the Dow fell around 0.6%. The Nasdaq Composite dipped just 0.2%. At the start of the week, the Nasdaq Composite and S&P 500 had fallen over 3%.
What To Expect This Week: July CPI Data
This week will see heightened speculation over Fed rate cuts. One of the key economic metrics investors are watching is the upcoming July Consumer Price Index (CPI).
Analysts forecast the CPI data, which comes out on Wednesday, August 14, 2024, will show inflation at 3% for July, the same as last month. They also anticipate that core inflation, excluding food and energy prices, will dip slightly to 3.2% from 3.3% the previous months.
If the figures come in higher than that, it could lead to another week of volatility. It could place further pressure on stocks that are still recovering from Monday’s meltdown. Additionally, it could water down hopes of aggressive rate cuts by the Fed in September.
According to Federal Reserve Governor Michelle Bowman, if the upcoming economic data shows “inflation is moving sustainably toward our 2% goal,” the Federal Reserve will have to gradually lower rates.
Besides the CPI data, retail sales reports, consumer sentiment, weekly unemployment data, and manufacturing data will also be closely watched.
Walmart’s Upcoming Earnings Report
While the focus will remain on economic data, Walmart’s (WMT) earnings will be closely watched in an otherwise quiet earnings week. Analysts forecast strong Q2 earnings from Walmart, set to be released on Thursday, August 15, 2024.
They forecast an EPS of $0.65 and revenue of $168.5 billion. That would be a 5% increase in earnings and a 4% YoY increase in revenue. In Q1, Walmart reported $.60 in EPS and $161.50 in revenue.
Walmart stock performed quite well last week amid the market meltdown. That helped to cement its anchoring position and could play a role in pushing it higher after the Q2 results. The results will offer insight into the health of the consumer economy. Amid worries of a recession risk, the data could help ease fears.
Walmart (WMT) Stock Performance
Walmart (NYSE: $WMT) has performed exceptionally well in 2024, rising 27.97% to $67.95 per share. The stock is below its 50 DMA of $68.36 and above its 200 DMA of $59.75. At a forward P/E ratio of 28.17, the stock is fairly priced in line with peer Home Depot, which has a forward P/E of 22.94.
Analysts remain optimistic about the future of WMT. They give it a moderate buy rating and forecast a wide range for the stock, with a high of $82 and a low of $64. Their average forecast of $73.74 is an 8.52% upside.
How Markets Could React
The upcoming economic data could have a significant impact on market sentiment. It could also influence central bank policies worldwide well into 2025. Any hints of rising inflation could unsettle markets and lead to further volatility.
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