SUPERNEWS

Macro

Disney, Uber, Starbucks, McDonald's Signal Spending Caution

Major firms like Disney, Uber, and McDonald's signal consumer spending caution, impacting market sentiment and economic outlook.

By Athena Xu

ᐧ

5/8, 11:38 EDT
S&P 500
iShares 20+ Year Treasury Bond ETF
iShares 7-10 Year Treasury Bond ETF
Apple Inc.
Amazon.com, Inc.
Walt Disney Company
McDonald's Corporation
SPDR S&P 500 ETF TRUST
Target Corporation
Tyson Foods, Inc.
Uber Technologies, Inc.
Walmart Inc.
article-main-img

Key Takeaway

  • Disney, Uber, Starbucks, and McDonald's earnings reflect a consumer pullback, impacting company revenues and indicating broader economic caution.
  • Despite consumer spending slowdown, AI enthusiasm and fiscal policies continue to drive stock market optimism.
  • Investors advised to adjust protection bands in anticipation of earnings estimate revisions and market crosscurrents.

Consumer Caution Emerges

Recent earnings reports from major companies such as Walt Disney Co, Uber Technologies Inc, Tyson Foods Inc, Starbucks Corp, and McDonald's Corp have highlighted a clear trend: consumers are becoming increasingly cautious about their spending. Disney's projection of no growth in its Experiences segment, which includes theme parks, is particularly telling given that these parks account for 52% of its operating profit. This trend is not isolated to Disney; Uber's stock decline and Tyson Foods' earnings report further underscore the broader consumer pullback. Starbucks and McDonald's have also felt the impact, with Starbucks posting its first quarterly sales decline since 2020 and McDonald's showing flat to declining trends. The Arora Report's analysis indicates that approximately 60% of consumers are pulling back, signaling a shift in consumer behavior that could have significant implications for the economy and stock market.

Market Sentiment and Money Flows

The early trade money flows provide insight into investor sentiment, with neutral flows in Apple Inc, and negative flows in Amazon.com, Inc., and SPDR S&P 500 ETF Trust. This mixed sentiment is further reflected in the actions of the momo crowd and smart money; the former is buying stocks while the latter is selling. In commodities, the momo crowd is selling gold, and smart money remains inactive, indicating a cautious approach to traditional safe havens. The build in API crude inventories and the yoyo-like behavior of the momo crowd in oil trading suggest uncertainty in the energy sector. These dynamics highlight the complex interplay of factors influencing market sentiment and the need for investors to navigate carefully.

Earnings Season and Consumer Stocks

The earnings season has brought consumer stocks into sharp focus, with companies like Starbucks, McDonald's, and Amazon reporting results that raise concerns about consumer resilience. The Federal Reserve's intention to keep interest rates high adds to the uncertainty surrounding consumer spending. Upcoming earnings reports from retail giants Walmart and Target are highly anticipated, as they will provide further insights into consumer spending habits. The performance of these companies could significantly influence expectations for economic growth and the retail sector, which has lagged behind the broader market in 2024.