Traders on the floor of the NYSE, August 11, 2022.
Source: NYSE
Here are the key news items investors need to start their trading day:
1. Bad start for stocks
Equity futures fell Monday morning, signaling a soft open to a pivotal week for investors looking for clues as to the state of the economy. All three major US indices closed higher last week. It was the fourth winning week in a row for the S&P 500. On Monday, however, markets were battling bad economic news out of China (more on that below) as they looked ahead to retail earnings reports (also more on that below). However, there was also good news for consumers as crude oil prices fell after the weak Chinese data, a sign that gas prices will fall further.
2. Big Week for Retail Revenue
Signage at a Walmart store in Secaucus, New Jersey.
Lucas Jackson | Reuters
It is retailers’ turn to be in the spotlight. On Tuesday, Walmart, which caused a stir by slashing its forecasts and cutting corporate jobs earlier this summer, will give investors a glimpse into how much inflation and overstocks are reducing margins. Target, which is deep in its own inventory reduction plan, reports Wednesday. Home improvement retailers Home Depot and Lowe’s report Tuesday and Wednesday, respectively. Then finally, on Thursday, Kohl’s will report. Investors will look for clues about the department store chain’s strategy after its deal with Franchise Group failed in late June.
3. Slow growth in China
Workers working on an air conditioner production line at a Midea factory in Guangzhou, China.
Jade Gao | AFP | Getty Images
Several soft economic data from China weighed on stocks Monday morning. The government reported growth in industrial production and retail sales that fell below analyst expectations. Manufacturing investment slowed, while the decline in real estate investment accelerated. The Chinese economy is struggling to shake off the impact of strict Covid restrictions, while the real estate sector suffers from reduced cash flow as many home buyers have stopped paying mortgage loans to protest delays in home construction.
4. Peloton cuts back on growth
In case you missed it Friday, pandemic darling Peloton unveiled several drastic measures as it looks for ways to turn a profit as people head back to gyms and the outdoors to exercise. The affiliate fitness company said it would cut 780 jobs, close several of its retail locations and outsource delivery and other logistics functions to third parties. “We need to make sure our revenues stop shrinking and start growing again,” CEO Barry McCarthy said in a memo to employees on Friday. “Cash is oxygen. Oxygen is life.” Peloton’s shares fell before the market opened Monday.
5. Going South
Scott Keogh of Volkswagen of America at the VW plant in Chattanooga, TN, June 8, 2022.
Michael Wayland | CNBC
As automakers’ plans to build and sell electric vehicles grow, so does their investment in the American South. Since 2017, auto companies have invested billions more in southern states than in the Great Lakes region, where Detroit, or the Motor City, is located. There are several reasons executives are drawn to the South, including lower costs, tax breaks and non-union labor. But car companies are also in trouble. Read CNBC auto reporter Michael Wayland’s deep-dive broadcast from Tennessee.
— Tanaya Macheel, Evelyn Cheng, Pippa Stevens, Lauren Thomas and Michael Wayland of CNBC contributed to this report.
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