In July, US consumer spending exceeded expectations with retail sales increasing by 1%, compared to the forecasted 0.3%. The labour market also showed strength, with initial jobless claims dropping to 227,000. Inflation showed signs of easing, with consumer prices rising just 0.2% for the month, bringing the annual rate down to 2.9%, its lowest since March 2021. Despite inflation above the Federal Reserve’s 2% target, easing price pressures have led markets to anticipate a rate cut in September.
WALMART
Walmart has demonstrated how artificial intelligence can significantly boost productivity, a rare example during turbulent times for the AI-driven market. Morgan Stanley analyst Simeon Gutman praised Walmart's use of generative AI, which helped the company improve its product catalogue, saving time and resources. CEO Doug McMillon highlighted that AI enabled them to manage data work that would have required 100 times more staff. Gutman sees Walmart as a "retailer of the future," raising his price target on the stock.
WMT (H4). After the stock split in February 2024, this is the highest point Walmart has reached. We see a clear bullish projection line, but the price may return to the weekly pivot around 68.50 before flying above the 70.00 level again.
AMAZON
Amazon's Prime Air drone program in College Station, Texas, is facing noise complaints from residents, particularly those near the drone facility. The drones, often compared to the sound of a chainsaw or a buzzing hive, have disrupted daily life. Some residents reported that the noise interferes with sleep and outdoor activities. Amazon has struggled to scale its drone delivery service due to regulatory hurdles and is now seeking to expand operations. Residents and officials are pushing back, citing noise concerns and proposing relocation of the drone facility.
AMZN (Daily). After breaking the bearish projection line and dynamic support turned resistance, price experienced a significant gap-down in early August. We see the price rebound and will reach a lower-high around 181.00 before continuing the bearish move.
STARBUCKS
Starbucks' recent leadership change, appointing Chipotle CEO Brian Niccol, has sparked optimism on Wall Street, especially regarding its struggling China business. Starbucks saw a 14% drop in same-store sales in China in the last quarter, prompting concerns over the future of its operations there. Analysts believe Niccol's experience, particularly at Yum Brands and Taco Bell, could guide necessary adjustments. Speculation about strategic partnerships or a potential spin-off of the China segment has also arisen. Investors hope Niccol's leadership will improve both the China business and the company's overall stock performance.
SBUX (Daily). After forming a double-bottom pattern at the 72.50 level, the stock price soared. However, last week's gap-up of more than 20%, may make a reasonable correction. We estimate that the price will fill the gap around 84.00 before continuing to strengthen.
Fullerton Markets Research Team
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