Background on Walmart and its Relevance
Walmart, one of the world’s largest retail corporations, has experienced a decline in its stock value due to various factors including tariffs, currency fluctuations, inflation, and global economic and geopolitical conditions. The company sources two-thirds of its products from the United States, with less than a third imported from China, Mexico, Vietnam, India, and Canada.
Stock Market Performance
On Thursday, Walmart’s shares fell 4.49% to $97.96 on the New York Stock Exchange (NYSE), marking its largest drop since April 4, when it declined by 4.66%. The company’s market capitalization decreased by $36,789 million, leaving it with a total value of $781,762 million.
Earnings and Sales
Walmart reported adjusted earnings per share of $0.68, falling short of the consensus estimate of $0.74. Despite this, the company surpassed expectations for quarterly sales, with revenue reaching $177,400 million, surpassing the forecasted $176,050 million.
Walmart now anticipates net sales growth between 3.75% and 4.75% by year-end, exceeding its previous expectations of 3% to 4%. However, experts consider the report mixed, as it exceeded consensus on sales but fell short on earnings for the first time since 2022.
Impact of Tariffs
Analysts like Cristina Morales from Signum Research note that the impact of tariffs has been gradual, not significantly altering consumer habits. However, Walmart faces rising costs each week as it replenishes its inventory.
“There is a high level of uncertainty, and we anticipate that costs will continue to adjust to new tariffs in the coming months. Despite being a defensive sector player, Walmart’s global integration creates more uncertainty due to tariffs imposed in several countries from which it imports products,” Morales explained.
Wall Street’s Decline
On Thursday, U.S. stock market indices closed lower as speculation grew that the Federal Reserve would pause its monetary policy in September. The Nasdaq Composite fell 0.34% to 21,100.31 points, the S&P 500 dropped 0.40% to 6,370.16 units, and the Dow Jones declined 0.34% to 44,785.50 points.
All sectors fell, except for energy and materials. Consumer staples experienced the largest decline.
The preliminary August manufacturing conditions index in the U.S., compiled by S&P Global, rose to 53.3 points—its highest in 39 months from July’s 49.8 points—indicating a recovery in sector expansion.
By Thursday evening, the probability of the Fed maintaining interest rates unchanged increased to 27% from 7.9% the previous week, according to the CME’s FedWatch tool.
The probability of a 25-basis-point rate cut in September fell to 74% from 92% the previous week, according to analysts at Análisis GBM Research.
Impact on Investor Confidence
Walmart’s performance negatively affected investor confidence, as its 4.5% stock drop was among the worst performers on the S&P 500 and Dow Jones.
Mexican Stock Market Rebound
The Mexican stock market rebounded on Thursday, nearly erasing recent losses with the release of various economic data. The S&P/BMV IPC rose 0.76% to 58,663.97 points, while the FTSE-BIVA increased 0.76% to 1,174.75 points.
These indicators saw their largest gains in two weeks, nearing their best level in over two months.
The market incorporated that Mexico’s retail sales fell for the second time in three months in June, while foreign direct investment reached a record high for the second quarter. Investors evaluated that Banco de México would continue lowering interest rates, as inflation slowed in line with expectations.
