Tuesday, July 26, 2022

US Market Wrap 07/26/2022

- Stocks fell as bad economic data and a weaker outlook from the world's largest retailer highlighted the effects of rising pressures on consumer spending, with recession fears rife as the Federal Reserve prepares to deliver another jumbo-sized boost.

- Walmart's rout engulfed industry peers, with Morgan Stanley stating that its prediction is a "possible danger signal" for Amazon's retail margins. In late trading, a $166 billion exchange-traded fund tracking the NASDAQ 100 soared as Google's parent company, Alphabet surged after earnings. Microsoft slumped after reporting its worst sales growth since 2020.

- Traders were also bracing for another 75-basis-point boost by fed officials on Wednesday, with a combined increase of 150 basis points in June and July being the highest rate rise since the early 1980s, when then-chairman Volcker was battling sky-high inflation. Consumer confidence in the United States has dropped to its lowest level since February 2021, while a measure of new home sales has dropped for the fifth time this year.

- According to Goldman Sachs strategists, US policymakers are expected to remain hawkish for longer due to persistently rising inflation, the latest to enter the debate over a potential central bank pivot as the economy slows. They agreed with Morgan Stanley's Michael Wilson, who said on Monday that it's too early to anticipate the Fed to stop raising.

- Meanwhile, strategists at JPMorgan believe that bets that prices have peaked will result in a Fed turnaround and strengthen the picture for equities in the second half.