Did Walmart’s warning just wake the bears? 21/02/2025

HOT stories for today

US market wrap:
 

• During Thursday’s standard trading session, the Dow declined by 1.01%. The S&P 500 dipped 0.43% and pulled back from its fresh record peaks, while the Nasdaq Composite slid 0.47%. Market participants cited multiple factors for the downturn beyond Walmart’s 6.5% slump, including persistent inflationary worries and a pullback in Palantir shares.
• Yields on 2- and 10-year Treasury bonds dropped for the fourth time in five trading days. Weekly unemployment claims inched upward, though the broad reductions backed by President Trump and the Department of Government Efficiency have yet to be fully reflected in the figures. The Philadelphia Fed’s manufacturing gauge cooled from last month’s surge but remains strong enough to sustain optimism. Meanwhile, Fed’s Musalem cautioned that a stagflation-like pattern cannot be dismissed.

Did Walmart’s warning just wake the bears?

• Walmart’s stock took a hit Thursday after the retail giant delivered a cautious outlook that overshadowed its otherwise strong quarter. The company’s warning of a potential profit dip—the first in years—spooked investors, raising concerns about shifting consumer spending and ongoing economic uncertainty.
• Despite delivering solid earnings, boosting its dividend, and maintaining strong sales, Walmart’s conservative guidance hinted at challenges ahead. The retailer cited pressure from consumers gravitating toward lower-margin essentials like groceries and pharmacy products over higher-profit general merchandise. Yet, not everyone is worried. Some analysts see Walmart’s outlook as a classic case of underpromising to overdeliver. With the company’s track record of beating expectations, they view the pullback as a buying opportunity rather than a red flag. Meanwhile, broader economic worries, including inflation and potential stagflation, continue to cast a shadow over market sentiment.

 
Stocks on the move:       

• Rivian Automotive (RIVN) – Shares of the electric vehicle manufacturer climbed over 3% after reporting a fourth-quarter adjusted loss of 46 cents per share, beating analyst projections of a 65-cent loss, according to LSEG. Revenue also exceeded expectations.
• Block (SQ) – The fintech firm's stock slumped 6% following weaker-than-anticipated fourth-quarter results. Block posted adjusted earnings of 71 cents per share on $6.03 billion in revenue, falling short of analysts’ forecasts of 87 cents per share and $6.29 billion in revenue, per LSEG.
• Celsius Holdings (CELH) – The energy drink giant skyrocketed 28% in after-hours trading after delivering stronger-than-expected results. Celsius reported adjusted earnings of 14 cents per share on $332 million in revenue for the fourth quarter, surpassing analyst estimates.
• Akamai Technologies (AKAM) – Shares of the cloud computing company tumbled more than 6% after issuing first-quarter earnings and revenue guidance that fell below Wall Street expectations.

Today’s action

• Hong Kong stocks surged to a three-year peak on Friday, leading regional markets as investors balanced Japan’s rising inflation against renewed tariff threats from U.S. President Donald Trump. Japan’s Nikkei 225 inched up 0.25%, while the Topix remained flat. Inflation in Japan hit 4% in January, marking its highest level in a year.
• Meanwhile, U.S. stock futures showed little movement early Friday after major indexes slipped on Walmart’s cautious earnings outlook. Dow futures edged down 14 points, S&P 500 futures dipped 0.09%, and Nasdaq-100 futures hovered near break-even. Markets are bracing for potential volatility as investors await key data releases, including Flash Manufacturing and Services PMI, Consumer Sentiment, and Inflation Expectations. With options expiration in play, stocks could see heightened swings heading into the weekend.

Wahtclist: DBX, RIVN, SQ, AKAM, CELH, VIPS, SMCI, OXY

Bitcoin

• Bitcoin’s price action is stabilizing between $96,000 and $98,000 after a 10.3% pullback from its January 20, 2025, record high. Meanwhile, the S&P 500 dropped 1% on February 20, and the US dollar hit a 70-day low against a basket of foreign currencies. Over the past six months, Bitcoin has moved in tandem with the US Dollar Index (DXY), raising speculation about whether a correction is imminent.
• Both assets gained momentum from September 2024 to January 2025 before struggling to sustain their bullish run. While some analysts believe President Donald Trump’s policies could strengthen the dollar through fiscal discipline, persistent inflation and sluggish retail sales hint at possible stagflation. The full impact of recent tariffs and budget cuts remains unclear, but a report from Raymond James’ CIO Larry Adam suggests these measures could shave 0.6% off US GDP growth and push inflation up by 0.5%. While not necessarily bearish for Bitcoin, such economic uncertainty could weigh on investors' risk appetite. Whether the DXY’s influence over Bitcoin continues or weakens remains to be seen.
  Watchlist: Bitcoin: 89 000-109 370, Ethereum: 2200-3000, Solana: 180-276

Forex

• The Japanese Yen softened on Friday following comments from Finance Minister Katsunobu Kato, though losses were contained by rising expectations of further Bank of Japan (BoJ) rate hikes. Japan’s stronger-than-expected National CPI data reaffirmed this outlook, supporting elevated Japanese government bond (JGB) yields and narrowing the rate gap with other major economies. Meanwhile, broader bearish sentiment surrounding the US dollar helped cap gains for USD/JPY.
• In the euro-dollar market, EUR/USD is showing signs of a possible bearish reversal after recent gains, hovering around 1.0500 during Friday’s Asian session. The pair is trading within a rising wedge pattern, typically signaling weakening buying momentum. If the 14-day RSI surpasses the 70 mark, a downward correction could follow, potentially testing key support at the nine-day EMA of 1.0453. Traders will be watching closely for further confirmation of a shift in trend.
  Watchlist: EUR/USD: 1.0200-1.0550, USD/JPY: 153.6-158.80

Basic Materials

• West Texas Intermediate (WTI) crude oil remains in a tight range on Friday, consolidating its four-day rebound from this year’s low. Despite hopes for strong U.S. fuel demand and supply concerns in Russia, WTI hovers around $72.40, failing to sustain upward momentum. The mixed fundamental backdrop suggests traders should exercise caution before making aggressive directional bets.
• Meanwhile, gold (XAU/USD) pulls back slightly from its all-time high but remains well-supported. Worries over U.S. President Donald Trump’s tariff policies and the risk of a global trade war continue to fuel demand for the safe-haven metal. Additionally, expectations that protectionist measures could drive inflation higher bolster gold’s appeal as a hedge against rising prices. While the U.S. dollar’s weakness may limit downside risks, gold traders remain watchful for further catalysts.
  Watchlist: GOLD 2600-2945, US Oil: 70.00-79.00

Key Economic Events Today:

EST time
09:45 am: USD FlashManufacturing, Services PMI 
10:00 am: USD Existing Home Sales
10:00 am: USD Consumer Sentiment
10:00 am: USD Inflation Expectations
11:30 am: USD FOMC Member Jefferson Speaks

Earnings

BMO (Before the US Market opens)
VIPS          Vipshop Holdings
ABR           Arbor Realty Trust
SHO          Sunstone Hotel Investors
AMC (After the US Market closes): Enjoy your weekend!

The TEFS Analyst team wishes you a successful day!