With sentiment rising that the Federal Reserve will delay raising interest rates at September's meeting of the Open Market Committee, Wal-Mart Stores' weak earnings report yesterday added one more reason to bet against the first rate hike in nine years.
The price of Fed Funds futures after Wal-Mart's report pointed to a 36 percent chance of a September rate hike—down 9 percentage points since Monday, according to the CME FedWatch.
Wal-Mart is not only the nation's biggest retailer by sales but is keenly focused on the middle-income families whose lost ground on wages has helped convince the central bank to hang on to its stimulative monetary policies even as onetime thresholds for rate hikes have been achieved. Wal-Mart's inability to boost revenue materially points to its own competitive battles against Amazon.com and other retailers, but economists say it also is hampered by the fact that its customers don't have very much money.
"Wages are always the elephant in the room when it comes to consumer budgets," Moody's Analytics managing director Scott Hoyt said. "Clearly, the lack of growth in wages is a constraint on middle-income folks who aren't benefiting from housing appreciation or a rising stock market.''