Startups Good news amid the scary economic signals

Good news amid the scary economic signals


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The stock market suffered its worst day of the year last week when the Dow dropped 800 points Wednesday in response to a key yield curve inversion in U.S. Treasuries.

Yield inversion

Last week, the yield on 10-year U.S. Treasury notes fell below the yield on 2-year Treasury notes, an economic signal that has predicted each of the past nine U.S. recessions dating back to 1955. The good news for investors is that stock prices historically have not peaked until an average of 21 months following this bearish inversion, according to LPL Research.

The yield curve inversion spooked investors just days after a large pro-democracy protest shut down Hong Kong International Airport for two days. The protests are already having an economic impact on Hong Kong, which unveiled a $2.4 billion government support package Thursday.

Despite the market volatility, investors got a bit of good news on the trade war front when China’s Ministry of Foreign Affairs said it “hopes the U.S. will meet China halfway” in upcoming trade negotiations, opening the door for a potential compromise.

Investors also got some good news on the U.S. economy on Thursday when the Commerce Department reported better-than-expected 0.7% retail sales growth for the month of July.

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Earning season winding down

Walmart wowed the market with an earnings beat, while Macy’s and tech bellwether Cisco fell short of expectations. Earnings season continues this week with reports from Chinese search giant Baidu on Monday, Home Depot on Tuesday, Target on Wednesday and Salesforce on Thursday.

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With earnings season now more than 90% complete, about 75% of S&P 500 companies have reported earnings beats and 57% have reported revenue beats, according to FactSet. Overall earnings growth for the quarter is down 0.7%, putting the S&P on track for its first back-to-back quarters of earnings declines since 2016.

Economic numbers

This week, investors will be watching to see if Treasury yields continue to fall to new multiyear lows. They will also be monitoring Federal Open Market Committee meeting minutes expected out Wednesday and U.S. home sales data expected Wednesday and Friday for updates on the health of the economy.

Weekly quiz

This company has grown to become one of the world’s largest retailers, ranking at number 47 on the Global 500 list. Its food stores make up around 92% of its total revenue while jewelry stores and manufacturing facilities contribute the remaining portions.

In 1883, the founder invested all of his life savings to open the first location in Cincinnati. It was so well-received by the public that around 20 years later, it had already expanded to 40 stores and generated $1.75 million in sales. 

Throughout its history, it led in innovations within the retail industry. With its purchase of 14 Nagel meat markets, it became the first store in the industry that sold groceries and meats under the same roof. In 1916, it was the first chain to introduce self service. Later on, it would establish the first grocery foundation to test food products scientifically. As technology continued to advance, it also introduced the first experimental scanner checkout system throughout its chain.   

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As it expanded geographically, it also grew its product portfolio, introducing fresh seafood, fragrances and more. What followed was a series of mergers that continued to build the company. The first one was with Dillion Companies Inc., a manufacturer of more than 4,000 food and non-food products, and then a second one with Fred Meyer Inc., one of the largest supermarkets. 

Even after becoming a leader in its industry, it continued to take out a portion of its resources toward moving society forward. In 2000, it earned America’s Second Harvest’s title of “Grocery Distributor of the Year.” It was also inducted into Billion Dollar Roundtable Inc. for its work with minority and women owned suppliers. 

Answer: Walmart

Benzinga is a financial news and data company headquartered in Detroit.

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