Walmart gives a major clue about the possibility of a US recession, days after Home Depot’s grim warning

Walmart’s second quarter posted strong earnings and sales, Chief Executive Doug McMillon told analysts on Thursday’s earnings call.

“The chain is not seeing a softening of the overall consumer,” McMillon said.

Walmart shares rose more than 6 percent in early trading following the news.

Shares are up more than 30 percent so far this year.

Home Depot warned yesterday that consumers were feeling the pinch from higher interest rates and had cut back on spending on home improvements as a result.

The hardware giant’s sales fell 3.6 percent in the latest quarter, raising fears that the U.S. economy was heading for a recession.

However, current Walmart and unemployment numbers suggest otherwise, and analysts are pointing to a much more optimistic outlook with possible rate cuts on the horizon.

“We’re back to an environment where good news is good news and bad news is bad news,” eToro’s Bret Kenwell said of the latest data.

‘Investors and consumers want inflation to come down, but not at the expense of the economy. Today’s stronger-than-expected retail sales figure eases some recent fears that the US may be entering a recession.’

“After a weak payrolls report, there were concerns that the Fed waited too long to cut rates,” he added.

‘While it would still be appropriate for the Fed to cut rates next month, today’s reports should buy them some time until the September meeting.’

It’s been a tough few weeks for the markets, but today’s economic data seems to have brought some cheer.

The S&P 500 rose 1.1 percent and the Nasdaq gained 1.8 percent in early trading thanks to positive sales and falling unemployment data.

Jobless claims have fallen to their lowest level since early July.

U.S. retail sales rose 1 percent in July, the largest increase since January 2023.

The data suggest fears of a weaker consumer have been overblown, a positive indicator for the broader economy.

The value of retail purchases rose 1 percent and sales excluding automobiles and gasoline increased 0.4 percent, according to the Commerce Department.

Sales of cars, electronics and household appliances posted strong gains.