Walmart Earnings and April CPI: Key Catalysts for the Market in May

Investors are bracing for two major economic events in the coming weeks: Walmart’s Q2 fiscal 2025 earnings and the April 2025 Consumer Price Index (CPI) report. Both could reshape market sentiment, offering clues about consumer resilience and inflation dynamics. Let’s dissect what to watch.

Walmart’s Earnings: A Test of Omnichannel Strength

Walmart’s Q2 results, released on August 15, 2024, underscored its shift toward e-commerce and advertising. Revenue rose 4.8% to $169.3 billion, while adjusted EPS climbed 9.8% to $0.67. The standout performance came from omnichannel initiatives: global e-commerce sales surged 21%, driven by store-fulfilled pickup/delivery and marketplace services. Advertising revenue also jumped 26%, with Walmart Connect leading gains.

But the real story lies in operational discipline. Inventory grew just 2.0% year-over-year, a testament to efficient supply chain management. Returns improved too, with ROA at 6.4% and ROI at 15.1%. Management’s forward guidance for FY2025—$676.66 billion in revenue and $2.45 in EPS—hints at sustained momentum.

Investors will scrutinize whether Q3 results, due on February 20, 2025, can maintain this trajectory. Weakness in discretionary spending or supply chain hiccups could dent confidence.

April CPI: Inflation’s Next Move

The April CPI report, due on May 13, 2025, will test whether inflation is cooling further. March’s data showed the all-items index fell 0.1% month-over-month but rose 2.4% annually. Energy prices, down 2.4% in March, remain volatile: gasoline plummeted 6.3%, while natural gas spiked 3.6%. Food prices edged up 0.4%, with meat costs surging 1.3%.

Core inflation (excluding food/energy) grew just 0.1% in March, the smallest monthly increase since 2021. Shelter costs, however, rose 0.2% (4.0% annually), a drag on progress.

The April report will also incorporate methodological changes for the “leased cars and trucks” index, now using transactional data instead of surveys. This tweak could reduce prior overestimates, potentially skewing month-to-month comparisons.

If April’s core CPI stays below 0.2%, it could signal a soft landing for the economy. A surprise spike, though, might force the Fed to reconsider rate cuts.

Why These Reports Matter Together

Walmart’s results reflect consumer spending health, especially in discretionary categories. Strong e-commerce and advertising growth suggest households are adapting to inflation by prioritizing convenience and deals. Meanwhile, the CPI’s shelter and energy trends will determine whether the Fed feels confident enough to pivot toward easing.

A win-win scenario for markets would be Walmart beating estimates (reinforcing resilience) paired with a modest CPI print (easing rate hike fears). Conversely, a weak Walmart report or a hotter-than-expected CPI could send stocks lower, particularly in consumer discretionary and rate-sensitive sectors.

Conclusion: A Crossroads for Growth and Inflation

Walmart’s Q2 success highlights its strategic bets on omnichannel retail, but Q3 must prove this isn’t a one-quarter wonder. Meanwhile, the April CPI’s methodological shift and soft core inflation trend suggest the Fed’s patience could pay off—if energy markets stabilize.

For investors, the key takeaways are clear:
1. Walmart’s Earnings: Watch for margin expansion and inventory trends. A revenue beat above $170 billion would signal sustained demand.
2. CPI Report: Core inflation below 0.1% could push the Fed closer to pausing hikes, boosting equities.

With both events set to redefine the economic narrative, staying attuned to these catalysts will be critical for positioning portfolios in 2025.