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“What’s good for the United States is good for the New York Stock Exchange. But what’s good for the New York Stock Exchange might not be good for the United States.” – William McChesney Martin

Morning stock market summary

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If this market has you down lately, you have a group of 24 stockbrokers to thank, who signed the Buttonwood Agreement, which basically established the New York Stock Exchange, 230 years ago today.  Through all of the country’s ups and downs, the NYSE has weathered it all, and as bad as 2022 has been for markets, the NYSE has seen worse.

This morning, futures are in a positive mood following on the back of strength in Asia and Europe.  Rates are higher, the dollar is down, and crude oil is down for the fifth straight day.  In order to remain positive, though, we have a busy day of economic data to get through with Retail Sales at 8:30, Industrial Production and Capacity Utilization at 9:15, and then Business Inventories and Homebuilder Sentiment at 10 AM.  As if that wasn’t enough, there will be a number of Fed speakers hitting the wires throughout the trading day.

In today’s Morning Lineup, we recap the continued developments in retail earnings (pg 4), market action in Asia and Europe (pg 4), economic data in Asia and Europe (pg 5), and a lot more.

We’re now in the retail leg of earnings season, and this morning’s report from Walmart (WMT) marks the unofficial end of the reporting period as the stock reported weaker than expected EPS despite stronger than expected revenues (you can thank inflation for that).  The stock is currently trading down about 7% which is somewhat fitting given how bad this earnings season has been for the stock market.

The graphic below is from our Earnings Explorer and shows every time in the last 20 years that WMT has gapped down 3% or more in reaction to earnings.  Just to illustrate how large this morning’s downside move is for WMT, there have only been two other times in the last 20 years that the stock gapped down 5% or more in reaction to earnings.  Those reports were both in February (2018 and 2021), and the stock continued lower from the open to close each time.  For a company like WMT with such strong operations and logistics, downside surprises of this magnitude have been few and far between.

Below we show a price chart of WMT for the last year. While the stock broke out of a range in early April, the momentum didn’t last long, and by late April the rally reversed.  Last week, the stock broke below prior resistance levels, and while it tried to bounce yesterday, the rally ran out of steam right at the 50-day moving average.  At current pre-market levels, WMT will not only be trading back below its 200-DMA, but it will also be trading at oversold levels and its lowest point since early March.

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