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Today in the Market (8/17/2023)

Good Evening! On Thursday, US equities had a significant decline for the third consecutive session, contributing to a negative trend in the month of August on Wall Street.

The downhill trend continues for the three indexes with Nasdaq Composite leading the way down by 1.17%, the Dow Jones following behind by 0.84%, and S&P 500 declining by 0.71%.

WALMART SHOWS A DIFFERENT STORY

Walmart (WMT) reported second-quarter earnings that displayed contrasting performance compared to the retailer Target (TGT). According to statistics from Bloomberg, an impressive result was seen with a 6.30% increase in same-store sales, above the anticipated growth of 4.04%.

  • Revenue: $161.6 Billion vs. $159.7 Billion Expected
  • Traffic growth: 2.90% vs. 1.63% Expected
  • Ticket growth: 3.40% vs. 2.00% Expected
  • Earnings Per Share: $1.84 vs. $1.70 Expected

Don’t forget Sam’s Club! The wholesale operation of Walmart, known as Sam’s Club US, saw a positive growth in sales during the past quarter, with a 5.5% increase. However, this figure fell slightly below the anticipated growth of 5.58%. The back-to-school and automotive sectors saw strong performance as consumers made purchases to prepare for the upcoming back-to-school period, resulting in increased sales for both.

Gains in E-commerce Business! The total net sales of e-commerce had a significant rise of 24%, mostly driven by the surge in demand for pickup and delivery services. Currently, online sales account for 15% of overall sales, amounting to a large worldwide revenue of $24 billion.

ON THE SIDELINE

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According to the statement by Freddie Mac, there was an increase in the average rate of the widely-used 30-year fixed mortgage to 7.09% this week, compared to 6.96% in the previous week. This is the highest value seen since the first week of April 2002 and signifies just the third instance in which rates have been above 7% since that time. The most recent occurrences took place in October and November of 2022, during which the rate reached a value of 7.08%.

Things don’t look too good… Interest rates have seen a volatile increase since the beginning of the year, as the Federal Reserve tries to control inflation. The current week’s rise worsens the affordability issue for purchasers looking to not break the bank. These buyers are currently dealing with increased housing costs and a limited selection of options due to homeowners’ desire to not sell and wanting to keep their favorable mortgage rates.

What else? The inventory of unsold single-family houses had a small rise of less than 1% for the week ending August 14, resulting in 492,000 available units. However, it is important to note that this figure represents a 10% decrease compared to the same week in the previous year. According to Altos Research, the increase in seasonal gain may have resulted in a higher number of prospective purchasers halting their search.

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