5 things to know before the stock market opens on Tuesday, July 26

Traders work on the floor of the New York Stock Exchange (NYSE), July 25, 2022.

Brendan McDermid | Reuters

Here are the most important news that investors need to start their trading day:

1. Stock futures segment

US stock markets were poised for a lower Tuesday morning after Walmart cut its earnings forecast on Monday (see more below), sending a shock wave through the retail sector. Stocks have shown signs of life in recent weeks, but are still on shaky ground after a terrible first half of the year. Major indices were mixed on Monday, with the Dow rising, the S&P 500 effectively flat and the Nasdaq down. The busy earnings schedule continues, too. General Motors, McDonald’s and Coca-Cola were all reported before the bell on Tuesday. Google parent company Alphabet, Microsoft and Chipotle are set to advertise after the market closes. Investors will also be looking forward to fresh economic data on Tuesday morning: Case-Shiller’s May Home Price Index will be released at 9 AM ET, while consumer confidence and new home sales data are due at 10 AM.

2. Walmart Warning

Walmart Rollback pricing tags are displayed as customers shop during the grand opening of the new Wal-Mart store location in Torrance, California.

Patrick Fallon | Bloomberg | Getty Images

Walmart, the largest US retailer and grocer, gave people worried about a recession another reason to worry when it cut its earnings guidance after Monday’s bell. The company said shoppers spend more on necessities like groceries, which usually have low profit margins, and avoid items like electronics. Walmart, in turn, lowers prices for merchandise that piles up on the shelves, such as clothing, which also reduces its bottom line. The company’s stock fell. The warning also affected other retailers, including Target and e-commerce giant Amazon. Both companies’ shares fell in off-market hours as well.

3. McDonald’s and Coca-Cola Report

The McDonald’s logo appears on a restaurant in Arlington, Virginia, January 27, 2022.

Joshua Roberts | Reuters

Two major consumer firms released their quarterly results Tuesday morning, giving investors a taste of how people are coping with soaring inflation. Coca-Cola topped analysts’ estimates on its top and bottom lines, as it raised prices to offset higher costs on things like shipping, aluminum and corn syrup. Meanwhile, McDonald’s said same-store sales increased 3.7% in the US, topping StreetAccount’s estimate of 2.8%. McDonald’s said the rise was largely due to some price increases and the popularity of value offerings.

4. The supply chain disturbs GM

Signs advertising Buick and GMC, brands owned by General Motors, are seen at an auto show in Queens, New York, November 16, 2021.

Andrew Kelly | Reuters

General Motors on Tuesday reported earnings that were lower than Wall Street expectations. The Detroit automaker said a lack of parts prevented it from shipping nearly 100,000 vehicles during the last quarter. However, the company maintained its earnings forecast for the year. GM is also preparing for a possible recession, according to CEO Mary Barra. “We have also modeled several deflationary scenarios and are prepared to take deliberate action when necessary,” she said in a statement. Crosstown rival Ford is due to announce the results after the bell on Wednesday.

5. The two-day Fed meeting begins

Federal Reserve Chairman Jerome Powell reacts as he testifies before the Senate Banking, Housing, and Urban Affairs Committee hearing on the “Semi-Annual Monetary Policy Report to Congress,” on Capitol Hill in Washington, DC, US, June 22, 2022.

Elisabeth Frantz | Reuters

Although they digest a slew of earnings reports this week, investors will be limited by what the Fed says Wednesday afternoon, after wrapping up its two-day meeting. Most expect the central bank to raise interest rates by 75 basis points (each basis point equals 0.01 percentage point), but with inflation still rising, market watchers are looking for any hints about what President Jerome Powell and his fellow policymakers will do next. “I think it’s going to be a mixed bag,” Vincent Reinhart, chief economist at Dreyfus and Mellon, told CNBC. “He’ll talk before what could be another quarter of real GDP decline.”

CNBC’s Sarah Main, Melissa Rybko, John Rosifer, Amelia Lucas and Ian Kretzberg contributed to this report.

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