Executives are less worried about inflation. Walmart’s earnings target may vary

“Overall, we expect a challenging start to the year, driven primarily by continued headwinds in discretionary categories that partially offset continued strong momentum in grocery,” Oppenheimer retail analysts said in a research note on Wednesday.

Target, which reports results Wednesday, has more exposure to the former, and Walmart, which reports Thursday, sells more of the latter.

Opinion: Raising interest rates has not brought inflation down to the Fed’s 2% target. Here’s what the central bank could do next.

Oppenheimer analysts said Wal-Mart is still undercutting prices on offerings like clothing and televisions, but said grocery demand and market share gains for the big-box chain are likely to help its results. For Target, they said “slow” sales were likely during the quarter, as weaker demand for home goods, apparel and consumer electronics acts as a counterweight against better offering in the food, beverage and beauty aisles of its store.

For the home improvement chain Home Depot, which reports on Tuesday, Oppenheimer analysts said, in a separate note, that March new home sales are improving, and they said wetter and cooler weather that month could drive increased demand for gardening supplies. However, they said that lower lumber prices could be a drag on same-store sales.

However, JPMorgan analysts said that “the forest looks much bleaker” for consumer spending. And data from Placer.ai, a foot traffic analytics company, shows that during the first four months of this year, consumer visits to Walmart, Costco and BJ’s Wholesale Club fell significantly from last year.

The goal was, at least during the months of January and February, to break out of this trend, before the visits subside into negative territory. The company said seasonal trends — that is, a reversal of the holiday season increase — and more conservative budgets for consumers could be partly responsible for the recession. But they also said that consumers’ visits to those stores were longer.

“The increase in average stay time indicates that — even though consumers may visit these chains less frequently — they appear to be doing more with each visit by filling larger carts and carving out time between each visit to save on gas costs,” Placer said. said Amnesty International.

Food prices are still on the rise, and they rose 7.7% last month. However, DA Davidson analysts said that while the rate at which rates have moderated, rates are still “more flat than many had expected,” given the Federal Reserve’s efforts to raise interest rates and orchestrate a slowdown in the labor market, as employers hiked in Try to attract talent, then raise prices to offset those costs. Recently, economists and federal policymakers have also pointed to efforts by US companies to protect profit margins — by increasing prices and lowering costs — as a major driver of inflation.

See also: Why the latest inflation report could cause trouble for stocks

However, further evidence has emerged that executives, on their quarterly earnings calls, aren’t as concerned about inflation as price increases have generally begun to slow — the latest consumer price index showed year-over-year consumer inflation falling below 5%. For the first time in two years in April. FactSet analysis found that so far this earnings season, the S&P 500 is down

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More companies than usual have commented on this topic during earnings calls.

From March 15 through May 11, 278 companies that made earnings calls mentioned the word “inflation,” John Butters, chief earnings analyst at FactSet, said in a report Friday. This is lower than previous quarters.

This week in earnings

Thirteen S&P 500 companies and three of the 30 Dow Jones Industrial Average

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Components are set to report quarterly results during the week.

There are also many outside major catalogs, including from abroad. As China moves away from COVID-19 restrictions, investors will get a clearer look at online activity and shopping trends in the country when search engine giant Baidu Inc.

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and e-commerce platform Alibaba Group Holding Ltd.

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a report. And when Rumble Inc.

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In a recent report, the right-leaning social platform happened to do just that before a Manhattan grand jury voted to convict Donald Trump. The results and the indictment sent shares higher, and executives can provide an idea of ​​whether the indictment has turned to more active involvement.

Jack in the Box Inc.

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and Deere & Co.

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Also report.

Call to put it on your calendar

Take the second: Take-Two Interactive Software video game publisher.

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RockStar Games — owner of “Grand Theft Auto” and “Red Dead Redemption” — announces quarterly results on Wednesday. These results will arrive after disappointing holiday results for the industry. The company said in February that it planned to cut costs and staff and said it had miscalculated its earlier forecast for the year, with CEO Strauss Zelnick telling analysts that “we are operating in an environment that is more challenging in many ways than we anticipated.”

MORE INFO: Wall Street wants to know when GTA VI will drop, too.

But as the company resets, Stifel analysts said they expect the disappointment to continue, thanks in part to the underwhelming reception to new launches like “WWE 2K23” and “Kerbal Space Program 2.” The results will hit the market after competition from Electronic Arts Inc.

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It got a boost from investors after its earnings last week.

numbers to watch

Chip supply, technology demand and sales figures: IT network provider Cisco Systems Inc.

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Applied Materials Inc. reports results on Wednesday, while Applied Materials Inc

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that sells manufacturing equipment to semiconductor manufacturers, reports Thursday. As companies strive to lower technology costs and otherwise, the results will help determine the state of the tech industry’s recovery from the pandemic boom, with AI becoming the catchphrase on earnings calls.