Walmart and Lowe’s stocks diverged after their latest earnings report but there was one shared message–there’s trouble ahead from President-elect Donald Trump’s proposed tariffs.
Walmart had the starker message, even as its shares gained on an improved outlook. Its CFO John David Rainey said consumers probably will face higher prices if Trump goes ahead with proposals for a 60% tax on goods from China and 10%-20%
levies on all other imports.
Lowe’s words were more circumspect, with the home-improvement retailer’s executives noting tariffs would lift costs but also saying they were waiting to see what happens when the new
administration takes office in January.
Together, the two reports are a reminder that the U.S. consumer still hasn’t recovered from high inflation and the impact of higher interest rates used to wrestle it back down. Walmart said shoppers are resilient but are still spending more on food than they have historically. Lowe’s said homeowners are still waiting for lower interest rates to embark on big home-improvement projects.
The chances that Trump will follow through on tariff threats in his second term look to be higher after the president-elect said he would nominate Howard Lutnick, a vocal fan of the levies, to lead the Commerce
Department. UBS economists estimate that a 20% tariff on a finished consumer good would translate to an average price increase of 8%.
On balance, Trump’s election win is still boosting markets, and the crucial holiday season should provide some further cheer. However, fanning inflation with tariffs could sour the mood for consumers–and the stock market.
—Adam Clark
|
MEMBER MESSAGE: Mansion Global Boutique
|
Holiday Gift Guide 2025
|
|
|
Upgrade your gifting with Mansion Global Boutique's one-stop shop for chic and stylish presents.
SHOP NOW
|
|
|
Retailers Post Earnings Beats, Warn of Trade Tax Impact
Walmart and Lowe’s both beat expectations and raised their full-year forecasts. Walmart got a boost from shoppers buying groceries, home goods, and toys in a sign of strength heading into the
heart of the holiday season. But it also joined others warning about the potential for higher prices from tariffs.
- Walmart reported earnings of 58 cents a share and revenue of $169.6 billion. The company said 75% of its market share gains in the quarter were from relatively more affluent shoppers, those from households
making more than $100,000.
- Walmart raised its full-year forecasts, to net sales of 4.8% to 5.1%, and adjusted earnings of $2.42 to $2.47 a share. CFO John David Rainey told CNBC that it’s too soon to say what products might cost more under President-elect Donald Trump’s tariffs.
- Lowe’s third-quarter profit of $2.89 a share and revenue of $20.2 billion both dropped from the same time a year ago. But the home improvement retailer raised its fiscal 2024 outlook to earnings of $11.80 to $11.90 a share, on sales of $83 billion to $83.5 billion.
- Recovery efforts after hurricanes Helene and Milton contributed to Lowe’s quarterly sales, but the demand for home-improvement spending and bigger-ticket discretionary projects hasn’t fully recovered. Consumers still face affordability challenges from inflation and interest rates, Lowe’s Chairman and CEO Marvin Ellison said.
What’s Next: Ellison told CNBC that Lowe’s is already talking to
suppliers to understand the potential implications of Trump’s tariffs and has been working to diversify its products and supply chain to better manage tariffs or other challenges.
—Janet H. Cho and Sabrina Escobar
Bitcoin Price Hits Record as Trump Euphoria Boosts Cryptos
At least one Trump trade is still sizzling. Bitcoin hit a record high overnight, as excitement about the incoming Republican administration lifts cryptocurrencies.
- The world’s largest token topped $94,000 for the first time ever, according to FactSet data. Crypto-related stocks Coinbase Global, MicroStrategy, and Robinhood Markets have also been climbing ever since it became clear Donald Trump would be returning to the White House.
- It seems like the stars are aligning for the crypto industry ahead of the
president-elect’s second term in office. The Truth Social parent Trump Media held talks to buy the digital-asset trading platform Bakkt, the Financial Times reported. Bakkt said it wouldn’t
comment on market rumors or speculation.
- News that Trump will nominate Cantor Fitzgerald CEO Howard Lutnick as Commerce Secretary is fueling the rally, too. Robert F. Kennedy Jr., another cabinet pick, said at the weekend that Bitcoin “will have no stronger advocate” than Lutnick.
- Tuesday also marked the first day of options trading in the iShares Bitcoin Trust–the biggest exchange-traded fund tracking the token’s price. Calls suggest that the market is betting on further gains.
What’s Next: For Bitcoin, the $100,000 milestone is now in sight. The path to six figures looks
“increasingly plausible” with Trump expected to ease regulation and institutional interest soaring, XS.com analyst Antonio Di Giacomo said in a note Wednesday.
—George Glover and Callum Keown
Microsoft’s Ignite Conference Shows AI Progress Has Slowed
Advancements in artificial intelligence models have stalled of late, leaving companies to find new applications for the current generation of AI. It’s a repeating pattern since the first AI innovations back in the 1950s. Microsoft CEO Satya
Nadella addressed concerns the exponential growth of AI models has begun to slow.
- At the company’s Ignite conference, Nadella laid out new features for the company’s enterprise AI platform, Microsoft 365 Copillot. But he also talked about the concerns, acknowledging that there’s a debate on whether the industry has hit the
wall with scaling laws. He called the skepticism good for innovation.
- For now, Microsoft’s version of innovation is built on existing models from OpenAI that have remained fairly static since 2023. Microsoft showed off a range of new features for Microsoft 365 Copilot from new capabilities in the Office applications to AI agents that can act autonomously.
- Microsoft also added a tool to analyze the return on investment from AI spending. These are important new layers that will help Microsoft’s customers to find productive uses for the AI models it has now, though Microsoft 365 Copilot is in its early days.
- OpenAI’s
blockbuster ChatGPT in November 2022 was followed quickly by GPT-4 in March 2023 but progr
