On Friday, the US stock market experienced a roller-coaster ride, initially dipping in the morning before making a recovery later in the day. The volatility was sparked by the release of the US Nonfarm Payrolls (NFP) numbers for February, which fell short of expectations. However, a Federal Reserve (Fed) Governor’s relaxed stance on the labor market data helped brighten the mood, and the market managed to close on an upswing.
All three major US indices ended Friday with gains, yet they didn’t escape the week’s losses. For the S&P 500 and NASDAQ Composite, this marked the third consecutive week in the red. Despite most stocks in the Dow Jones Industrial Average (DJIA) making gains during the session, Walmart stood out for all the wrong reasons, posting the poorest performance among its peers. Walmart’s stock dropped 3.1%, closing at $91.67.
Walmart Stock Update
This week, Walmart’s stock plunged over 7%, an ongoing decline since the company issued lukewarm guidance three weeks ago. A key issue causing apprehension is President Donald Trump’s tariff strategy. While he started the week by implementing 25% tariffs on imports from Canada and Mexico, a pause was announced on Wednesday for auto industry tariffs, which was then extended to encompass all goods under the United States-Mexico-Canada Agreement (USMCA) by Thursday.
In essence, Trump’s ever-changing tariff approach might be creating more uncertainty than stability. Notably, Trump maintained his stance on China, adding another 10% to the existing 10% tariffs imposed back in February.
Since Walmart sources a significant portion of its products from China and operates in both Canada and Mexico, the erratic tariff measures have the potential to affect the company’s annual results more than others. Bloomberg reported that Walmart executives have faced resistance from Chinese suppliers when trying to negotiate price reductions to help offset the tariffs. The suppliers were reportedly pushing back strongly against the idea of cutting prices by 10%.
Walmart asserts that two-thirds of its merchandise is US-sourced, suggesting most of their offerings should remain unaffected. However, US-based suppliers that rely on foreign inputs might still need to raise prices.
With Canadian tariffs mostly paused until April 2, there are murmurs that Canadian consumers might already be informally boycotting US products, which could pose another challenge for Walmart.
Nonfarm Payrolls Miss Expectations, Unemployment Ticks Up
The February NFP numbers revealed 151,000 new jobs, falling short of the 160,000 forecast. Yet, this was an improvement from January’s figures, though January’s numbers were revised downward from 143,000 to 125,000. The Unemployment Rate edged up slightly to 4.1%.
Interestingly, the weaker job numbers were welcomed by some investors, who speculate it might prompt the Fed to consider interest rate cuts sooner than anticipated. Fed Governor Adriana Kugler acknowledged the number as “solid,” especially in the context of the Trump administration’s widespread federal employment cuts.
However, Kugler expressed concerns that the tariffs could hinder economic growth and highlighted her focus on monitoring inflation expectations and the labor market closely.
On a related note, Fed Chair Jerome Powell commented that while Trump’s tariffs were adding to the uncertainty, the bank wouldn’t rush into slashing interest rates just yet.
Here is the WMT daily stock chart for reference.
