After riding high on record territory, the S&P 500 hit a speed bump—courtesy of Walmart’s not-so-cheery earnings outlook. The retail giant warned of shaky consumer spending, sending financials lower, while energy stocks managed to stay in the green.

Meanwhile, jobless claims rose more than expected, but the labor market isn’t breaking a sweat just yet. Over at the Fed, policymakers are keeping a close eye on trade and immigration shifts as businesses brace for potential cost pressures.

⚡ Closing Bell:

• S&P 500: ⬇️ –0.4% › 6,117.5 › Retreating from record highs.

• Dow Jones: ⬇️ –1% › 44,176.7 › Walmart’s slump hit the index hard.

• Nasdaq 100: ⬇️ –0.5% › 19,962.4 › Tech dipped as earnings rolled in.

• Russell 2000: ⬇️ –0.9% › 2,261.74 › Small caps followed the broader market lower.

Market Movers:
➝ Labor Market Softens: Jobless claims rose more than expected, though continuing claims stayed steady.
➝ Philly Fed manufacturing index dipped but stayed in growth territory.
➝ Fed Flags Risks: Officials warned that tariffs and labor shortages could push costs higher, adding complexity to policy decisions.

Macro Moves:
➝ 10-Year Yield: ⬇️ –3 bps › 4.51%
➝ 2-Year Yield: ➝ 4.27% (unchanged)

❗ Looking Ahead: Markets are adjusting to Walmart’s warning and fresh economic data. With jobless claims rising and Fed officials highlighting concerns over tariffs and labor supply, will corporate earnings provide a clearer direction?

#TRUTH:
❗❗❗ “We are what we repeatedly do. Excellence, then, is not an act, but a habit.”
~ Aristotle

Earnings Watch:

① Retail Reckoning ❌
➝ Walmart (WMT) -6.5% → Issued a weak full-year outlook, warning of cautious consumer spending and geopolitical risks.
➝ EPAM Systems (EPAM) -12.8% → Weak earnings guidance made it the worst performer in the S&P 500.

② Surprise Winners ✅
➝ Hasbro (HAS) +12.95% → Strong Q4 earnings + $1B cost-cutting plan sent shares soaring.
➝ Shake Shack (SHAK) +11.13% → Resilient sales despite wildfire-related headwinds, with double-digit growth projections.

Should We Really Panic?

Walmart’s stock tanked 6.5%, after the retailer forecasted full-year earnings of $2.50 to $2.60 per share, falling short of analysts’ $2.77 estimate. The disappointing outlook rippled through the market, weighing on financials and raising fresh concerns about consumer spending.

But here’s the catch: Walmart has a history of lowballing its guidance. Over the past two years, the company’s actual full-year earnings have beaten its initial forecast by an average of 10%.

If that pattern holds, Walmart’s real EPS could land closer to $2.80—slightly ahead of Wall Street’s current expectations.

The Bottom Line: While Walmart’s cautious stance spooked investors, history suggests this might be a strategic underpromise rather than a true warning sign. If consumer trends stabilize and Walmart once again outperforms its own forecast, this dip could look overdone in hindsight.

Yen-tastic Surge:

The U.S. dollar just hit its lowest level of the year, clocking its third straight weekly drop as traders rethink global trade policies and shifting inflation trends. Meanwhile, the yen made a run past 150 per dollar before backtracking after the Bank of Japan stepped in with a warning on bond buying.

Currency Check:

➝ Dollar Index: Drops to 106.29 before clawing back to 106.40
➝ Yen: Briefly surges to 149.28 per dollar, then slides back to 150.27
➝ Euro: Holding steady at $1.0504 ahead of German elections
➝ Aussie & Kiwi: Hitting yearly highs despite rate cuts
➝ Yuan: Pops to a one-month high as trade deal optimism rises

What’s Behind?

➝ Trade Tensions or Just Talk? Traders who bet on aggressive tariffs are dialing it back, as major trade restrictions remain more talk than action.
➝ Japan’s Inflation Surprise: Core inflation hit 3.2%, raising bets on higher BOJ rates—until the central bank pumped the brakes and sent the yen tumbling.
➝ Yuan’s Comeback? Hopes of a U.S.-China trade deal boosted the yuan, but whether it’s a real breakthrough or just market optimism remains to be seen.

With global PMI data dropping soon, traders are eyeing whether the dollar’s slide is just a blip—or a sign of a bigger shift.

🥚 The Eggxit Strategy:

Shake Shack expects fewer eggs and more chicken and beef on fast food menus as high egg prices push restaurants to rethink their breakfast offerings. While the burger chain itself isn’t heavily exposed to eggs, it noted that wider shifts in demand could impact meat prices, too.

This wouldn’t be the first time fast food giants pivoted—when beef prices surged, chicken took center stage. Now, inflation could be forcing another menu reshuffle, not for taste, but for cost-cutting survival.

In the Middle:

Oil prices crept above $72 a barrel, extending a modest winning streak as supply concerns and a weaker dollar kept traders on edge. Crude has now logged three straight days of gains, with investors weighing pipeline disruptions in Kazakhstan and speculation that OPEC+ may delay a planned production hike.

But not everyone is convinced the rally has legs. US crude inventories jumped 4.63 million barrels last week, marking a fourth consecutive buildup—raising questions about whether demand can keep up. Meanwhile, gasoline futures reversed early losses to climb 0.9%, as refiners shift production toward diesel, which is in higher demand amid cold weather.

For now, oil remains stuck in a tight trading range, with analysts noting that prices are moving more on headlines than fundamentals. Until a major catalyst emerges, crude may continue its slow grind in either direction.

Escapes:

Sequoia National Park, California

Highlights of the Day:

① Travel Boom:
➝ Booking Holdings (BKNG) ⬆️ +5.0% ✅ → Reported strong holiday travel demand, smashing earnings estimates. Added a $20B stock buyback to sweeten the deal.

② Nat 20 on Earnings:
➝ Hasbro (HAS) ⬆️ +12.9% ✅ → Topped Wall Street estimates and announced $1B in cost cuts. Big wins for Monopoly Go! and Magic: The Gathering, though tariffs remain a wildcard.

③ Bond, Amazon Bond:
➝ Amazon (AMZN) ⬇️ -1.7% ❌ → Gained creative control over 007 after its MGM acquisition, marking a major shift in how future Bond films will be made.

④ Rough Waters:
➝ Royal Caribbean (RCL) ⬇️ -7.6%, Norwegian (NCLH) ⬇️ -4.9%, Carnival (CCL) ⬇️ -5.9% ❌ → U.S. Commerce Secretary hinted at new taxes for cruise operators, sparking investor panic.

⑤ Defense $$ Crunch?
➝ Palantir (PLTR) ⬇️ -5.2% ❌→ Investors dumped shares after reports of potential defense budget cuts, though some analysts say the sell-off is overblown.

⑥ Cleared for Takeoff?
➝ Spirit Airlines (SAVEQ)⬇️ -7.4% ❌→ Won court approval for a lender-backed go-private deal, rejecting a Frontier merger offer. The restructuring wipes out existing shareholders but cuts $795M in debt as Spirit aims for a more premium business model.

Commodities Check : ✔️

• WTI Crude: ⬆️ +0.4% › $72.53

• Gold: ⬆️ +0.6% › $2,954.80/oz

• Silver: ⬆️ +1.2% › $33.43/oz

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Disclaimer

This letter is not offering investment, trading, or investment advice nor is based on any individual portfolio or business operation. We are not a registered investment, stock nor commodity advisor. One should consult with their own registered advisor to discuss investment strategies that are appropriate for their business or personal goals, risk tolerance and financial situation. Information in this report and on any website is derived from a variety of source believed to be reliable however no representation is made that the information is accurate, complete or correct. These lessons, newsletter and site content is not intended nor shall not constitute or be construed as an offer or recommendation to “buy”, “sell”, “trade” or invest in any securities, commodities, futures, options or other asset referred to in said lessons, reports or newsletters. Rather, this research is intended to identify situations and circumstances that those in the trading community should be aware of to better help assess and improve their own risk management skills.