US S&P500 Index

The S&P500 reversed lower overnight after testing all-time highs early in the session after a disappointing forecast from the world’s largest retailer added to concern about the economy’s main engine. Walmart Inc.  (WMT US), the first “big-box retailer” to report results after the holiday season, sank 6.5%. Its chief financial officer acknowledged “uncertainties related to consumer behaviour and global economic and geopolitical conditions.” The commentary came just days after retail sales signalled an abrupt consumer pullback. In an increasingly polarised economy, consumers are dealing with stubborn prices and high borrowing costs, and many are turning to credit cards and other debt to support their spending — with a rising number of those loans starting to go bad.

WMT’s commentary took the US retailer down to a three-month low, but profit-taking in the banks resonated with the ASX; the KBW Bank Index fell 2.7% as selling hit the outperforming sector. What concerns many pundits is the recent retail “frenzy like” buying into high-flying names. individual investors’ exposure to stocks is in the 96th percentile in data going back to 1997 as of the end of January, according to an analysis from Barclays’ equities tactical strategies division, while according to JP Morgan, sentiment across that group has also reached the highest on record, surpassing levels seen during the meme-stock mania of 2021 – a thematic behind today’s report.

• We can see the S&P500 rotating between 5750 and 6250 over the coming months, making the risk/reward unattractive at current levels.