Stocks drop on soft data and string of cautious earnings outlooks, downbeat earnings, potential SEC probe on Coinbase sinks crypto

US stocks declined after a wrath of gloomy corporate outlooks made it seem like this current wave of growth concerns would send this economy quickly into a recession. Risk appetite is struggling here as European gas prices are skyrocketing, multinationals are complaining of a troubling macro environment, and consumer confidence plunges. ​

Earnings

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

Shopify is feeling the weakening harder than most and it was forced to announce a 10% reduction of its workforce.

3M cut its outlook over a strong dollar along with the current troubling macroeconomic environment. ​

With a lot of massive earnings due after the bell and later this week, Wall Street is bracing for softer outlooks and intensifying recession pressures. ​

Consumer Confidence dips

The Conference Board’s consumer confidence report signaled the outlook for the consumer is uninspiring. 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 tumbled 5.9 points to 141.3, while the outlook deteriorated from 65.8 to 65.3. ​ The job market showed some weakness and income expectations declined. ​

FX

The strong dollar is having a major impact on earnings as many companies anticipate a noticeable drag on earnings for the rest of the year. ​ Coca-Cola CEO Quincy noted, “I hope it’s peak foreign exchange… the dollar cannot strengthen in an unlimited fashion without exporting.” Despite another wave of global recessionary fears, the dollar’s gains have been somewhat limited. ​ Some aggressive calls for significantly more pain for the euro are growing, but we first need to see how hard a recession hits the eurozone. ​

Crypto

The crypto spotlight was on Coinbase and the reported SEC investigation. ​ Coinbase was considered one of the better-run crypto companies that tried to obey the rules and work with the regulatory bodies. ​ The risk of tougher regulation has been a constant headache for crypto and it seems a couple of tough rulings could cripple a good portion of the cryptoverse. ​ If some cryptos are deemed securities that would make the lives of so many brokerages so much harder. ​

The potential SEC probe on Coinbase and rising recession risks took the life out of cryptocurrencies. ​ Bitcoin is still comfortably above the USD 20,000 level and ethereum is above USD 1300. ​

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