Following a wild run in the middle of the week, US equities were neutral on Thursday as investors processed news from corporate America suggesting that consumer spending may be about to slow down and that oil prices had dropped to a four-month low.
The Nasdaq Composite (^IXIC) and the benchmark S&P 500 (^GSPC) both increased by around 0.1%, while the Dow Jones Industrial Average (^DJI) decreased by roughly 0.1%.
Although somewhat less than anticipated, Walmart (WMT) increased its yearly projection and announced quarterly results that above estimates. Its stock dropped by about 8%. As freight rates improved and the department store’s earnings exceeded estimates, Macy’s (M) shares increased by more than 5%.
As investors processed the most recent round of company earnings, which included cautionary tales about the US consumer as we approach the holiday season, stocks were divided.
The Nasdaq Composite (^IXIC) and the benchmark S&P 500 (^GSPC) both increased by around 0.1%, while the Dow Jones Industrial Average (^DJI) decreased by roughly 0.1%. The tech-heavy average closed at its highest level since August 1st thanks to the Nasdaq’s little increase.
Thursday saw a 5% decline in crude oil futures as worries about a supply shortage subsided amidst growing stocks and signs of a downturn in the world economy.
West Texas Intermediate (CL=F) crude oil futures dropped more than 5.5% on Thursday, closing just above $72 a barrel. The global benchmark price of crude oil, Brent (BZ=F), dropped by almost the same amount to little under $77.
WTI crude oil prices have dropped more than 16% in the past month, while Brent crude prices have dropped more than 14%.
The current oil price is almost 22% less than the 2023 highs that were attained in late September, as doubts about demand increase in the wake of potential global economic slowdowns.
US stocks at Cushing, Oklahoma, the benchmark for WTI oil price, increased by 3.6 million barrels last week, above estimates of a rise of 1.2 million barrels, according to data released on Wednesday.
According to Andy Lipow, head of Lipow Oil Associates, “the oil production surveys for October have been showing increasing amounts of OPEC+ production and combined with higher inventories in the USA and worries over demand, prices have been falling.”
“When the market broke through $78, the selling accelerated as programmed trading kicked in.”
Within months of the business confirming that a third “Frozen” film will also be released in theatres, Disney CEO Bob Iger disclosed that “Frozen 4” may already be in development.
“‘Frozen 3’ is in the works, and there might be a ‘Frozen 4’ in the works too,” Iger stated on Thursday in a Good Morning America interview. Right now, I don’t have anything to say about those flicks. [Director] Jenn Lee is working hard on not one, but two storylines with her team at Disney animation. Jenn Lee is the creator of the original “Frozen” and “Frozen 2.”
The announcement coincides with Disney’s recent box office struggles, with its live action feature “The Marvels” earning a pitiful $47 million.
Although shares have gained almost 8% year to far, they have underperformed the overall markets, having gained 17% over the same period for the S&P 500 (^GSPC).
Analysts have cautioned that in 2024, the company’s content division is probably going to continue to suffer.
Doug Creutz, an analyst with TD Cowen, stated, “I don’t think the studio is going to be an engine that’s going to help Disney grow for the next 18 months.” “I don’t think it’s going to get worse, but I don’t think it’s going to get better either.”
Disney was once the industry leader, but it has fallen behind rivals at the box office. Marvel in particular has had trouble as a franchise since “Endgame” in 2019. Creutz attributed the outcomes to FOMO decrease and oversaturation.
“It was very much like, ‘Man, if I miss this Marvel movie, then I’m going to miss something important,” Creutz said in an interview with Yahoo Finance. He stated, “The thing with FOMO is if the ask on people gets too big, they won’t go see it,” and he wasn’t shocked by “The Marvels” failure, considering the negative reviews from critics.
“Marvel has asked a lot of audiences and they’ve done it at a time when the quality hasn’t been there because they’ve been trying to do too many different things,” he said. Here we are, then. Disney now needs to attempt to mend what went wrong.”
But Marvel isn’t the only one. Disney’s animation division has likewise done poorly.
Just before 1 p.m. ET on Thursday, the benchmark S&P 500 (GSPC) and the Nasdaq Composite (IXIC) teetered on both sides of the flat line, while the Dow Jones Industrial Average (DJI) fell by around 0.3%.
Energy led the sectors lower as West Texas Intermediate crude oil (CL=F) fell over 5% to just under $73 a barrel, its lowest level in almost four months. Consumer Staples also faltered following a depressing report from Walmart.
However, real disposable income has increased in 2023 as a result of a considerable decline in inflation. According to Goldman, it is expected to expand by 4% this year and by around 3% the next.
“[The real disposable savings rebound] should be sufficient to keep consumption growing at an OK pace, 2% or so,” Hatzius stated. “Nothing super rapid, but moderate growth would be my expectation, even with reduced excess savings.”
Walmart reported $160.8 billion in revenue for its third quarter of fiscal year on Thursday morning. The total income, which exceeded projections at $159.13 billion, is 5.2% more than the previous year. US same-store sales increased by 4.7%, above the forecasted 3.35% growth.
At $1.53 vs $1.52, adjusted earnings per share exceeded projections by $0.01.
More people were walking on foot than was predicted—3.40% growth. Compared to the predicted 2.08%, ticket size has increased by 1.5%.
Walmart provided cautious advice for the remainder of the year in spite of the earnings beat. It increased its forecast for full-year profits per share to $6.40 to $6.48, which was less than the projected $6.48 but better than its prior guide of $6.36 to $6.46.
In a conference call with investors, CFO John Rainey stated, “Recently, we’ve seen a higher degree of variability and weekly performance in between holiday events in the US, including seeing a softening in the back half of October that was off trend to the rest of the quarter.”
Rainey said that retailers should exercise greater caution on the condition of consumers due to uneven sales figures. “We’re encouraged by the increased traffic and share gains we’ve seen and expect,” Rainey said of Walmart, which anticipates that sales growth will drop in Q4 as grocery price inflation slows down.
After a screaming rise that had already driven markets much higher this week, stocks began to drop soon after the opening bell on Thursday as investors processed a plethora of company reports.
The benchmark S&P 500 (GSPC) dipped just below the flat line, while the Dow Jones Industrial Average (DJI) and Nasdaq Composite (IXIC) fell by around 0.2%.