Stocks Fall on Soft Data and Series of Cautious Earnings Outlook, Bearish Earnings, Potential SEC Investigation into Coinbase Sinks Crypto

U.S. stocks fell after a wave of gloomy business prospects gave the impression that this current wave of growth concerns would quickly send this economy into a recession. Risk appetite is in trouble here as gas prices in Europe soar, multinationals complain about a troubling macro environment and consumer confidence plunges.

Earnings

Walmart cut its outlook as inflation killed its earnings outlook for the year. Walmart is going to have big discounts as they try to improve their inventory levels.

Shopify is feeling the downturn harder than most and was forced to announce a 10% reduction in its workforce.

3M has cut its outlook on a strong dollar as well as the current troubling macro environment.

With plenty of massive earnings expected after the bell and later this week, Wall Street is bracing for a softer outlook and intensifying recessionary pressures.

Consumer confidence plummets

The Conference Board’s Consumer Confidence Report reported that the outlook for the consumer is bleak. Consumer confidence fell 2.7 points in July to 95.7, the lowest level since February 2021, which was much worse than the consensus estimate of 97.0. Current conditions fell 5.9 points to 141.3, while the outlook deteriorated from 65.8 to 65.3. The labor market has shown some weakness and earnings expectations have declined.

Effects

The strong dollar is having a major impact on earnings, as many companies are anticipating a noticeable drop in earnings for the rest of the year. Coca-Cola CEO Quincy said, “Hopefully this is the peak of FX…the dollar can’t get unlimited strength without exporting.” Despite a fresh wave of global recession fears, the dollar’s gains were somewhat limited. Some aggressive calls for much more pain for the euro are mounting, but first we need to see how badly a recession is hitting the eurozone.

Crypto

The crypto spotlight was on Coinbase and the investigation reported by the SEC. Coinbase was considered one of the best-run crypto companies that tried to play by the rules and work with regulators. The risk of tighter regulation has been a constant headache for crypto and it looks like a few tough moves could cripple much of the cryptoverse. If certain cryptos are considered securities, it would make life for so many brokerages so much more difficult.

The potential SEC investigation into Coinbase and growing recession risks have wiped out cryptocurrencies.​ Bitcoin is still comfortably above the $20,000 level and Ethereum is above $1,300.​

This article is for general information purposes only. It is not investment advice or a solution for buying or selling securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for everyone. You could lose all your deposited funds.

With over 20 years of trading experience, Ed Moya is a senior market analyst at OANDA, producing up-to-the-minute cross-market analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. . His particular expertise covers a wide range of asset classes, including currencies, commodities, fixed income, equities and cryptocurrencies. During his career, Ed has worked with some of the major forex brokerages, research teams and information services on Wall Street, including Global Forex Trading, FX Solutions and Trading Advantage. Most recently, he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks, including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His opinions are endorsed by the world’s most renowned news agencies including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.

Ed Moya
Ed Moya

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