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Walmart's quarterly report in the coming week will give investors fresh insight into the health of U.S. consumers, who are facing stronger inflation and uncertainty over whether President Donald Trump's tariffs will push up prices. The benchmark S&P 500 stock index was up about 1% for the week, with stocks showing resilience despite a hot report on consumer prices that led investors to push back expectations of further interest rate cuts this year. Wall Street closely watches trends in consumer spending, which accounts for more than two-thirds of U.S. economic activity. The extent to which inflation is weighing on shopping behavior could become more evident with Thursday's earnings report from retailer Walmart. "Walmart is sort of a canary in the coal mine as far as consumer spending and consumer health is concerned," said Robert Pavlik, senior portfolio manager at Dakota Wealth. Walmart's report could show "how much of higher food prices and higher gasoline or energy prices is digging into the discretionary spending of consumers," Pavlik said. The S&P 500 has climbed more than 3% this year, with broad gains among sectors. Investors have digested a flurry of policy announcements from the Trump administration, including on tariffs and federal government cost cuts, and more recently, discouraging data on inflation. Stocks sold off modestly on Wednesday after a report showed consumer prices in January jumped by the most in nearly 1-1/2 years, with Americans facing higher costs for a range of goods and services. The CPI data came on the heels of a survey that revealed U.S. consumer sentiment sank in February to a seven-month low as inflation expectations soared. Households feared it may be too late to avoid the negative effects from Trump's threatened tariffs, according to the survey's director. Company executives are grappling with the potential fallout from tariffs. Since the beginning of the year, nearly 430 companies in the S&P 1500 have either mentioned tariffs or responded to a question about tariffs on earnings calls or at investor events, according to LSEG data. WALMART IN FOCUS Walmart, as the most important consumer company in the country along with Amazon, will be closely watched for its commentary, said Matt Maley, chief market strategist at Miller Tabak. "It's not just what their numbers are and their guidance, but what they say about the consumer," Maley said. Walmart's comments could help address whether people are "so worried about tariffs that they're starting to question some of their spending," Maley said. A Walmart spokesperson declined to comment, saying the company was in a quiet period ahead of its earnings report. Walmart's report will be followed by results in the next few weeks from a range of consumer companies, including home improvement company Home Depot, off-price retailer TJX Cos and Target, that will also wind down fourth-quarter reporting season for corporate America. With nearly three-fourths of index companies having reported, S&P 500 earnings are on track to have climbed 15.2% from the year-earlier period, its strongest pace in three years, according to LSEG IBES data. Still, expectations for S&P 500 profits in 2025 have moderated since the start of the year, which some investors said has undercut optimism from the fourth-quarter reports. The potential impact from import tariffs - which are expected to weigh on profits and drive up inflation - is poised to remain prominent on Wall Street's radar in the coming week. Trump has announced a 10% tariff on China and a broad duty on steel and aluminum imports, while delaying tariffs on Mexico and Canada. "No one's quite sure what's a negotiation and what's the policy," said Rick Meckler, partner at Cherry Lane Investments. Hedge funds and other large investors, he said, "don't want to be caught short only to see a reversal in policy that causes the market to come right back."

Wall Street’s capacity to process drama got another workout in a week of rapid-fire headlines on tariffs, inflation and the Federal Reserve. Traders proved equal to the task, once again.From bonds to credit and equities, a standard pattern is emerging in a world beset with uncertainty. Jarring day-to-day swings set an emotional tone for investors — only to dissipate as the sessions wear on. Take government bonds. After falling more than 1% after Wednesday’s discouraging inflation report, a popular long-dated Treasury ETF was close to erasing losses for the week, with soft retail data revitalizing bets on interest-rate cuts. Stocks, meanwhile, closed near all-time highs on Friday, with tech sentiment of late proving particularly febrile.The overall result is a steady — if improbable — fall in pan-market turbulence, even as some measures of policy risk imply a backdrop as unsettled as any in nearly three decades. Weekly moves in 10-year Treasuries have been stuck in a tight range, for the longest such streak in eight months. Volatility in credit has plummeted and is receding as fast as it whips up in equities.Call it conditioning — the refusal of investors to repeat past mistakes that proved costly when a host of seemingly intractable macro threats quickly faded. The dynamic has played out repeatedly over the previous two presidential administrations, when everything from Covid to Fed rate hikes and Donald Trump’s trade bluster failed to dent Wall Street’s risk-on march.“The fear of missing out is more than theoretical. There are real-world consequences for trying to time the market if you are wrong,” said Chris Zaccarelli at Northlight Asset Management. “Investors have been conditioned. Those that went to cash in 2022 have been punished and that is the recency bias impacting a lot of people’s thinking.” 118265541Investors had no shortage of event risk to manage in a week that saw Trump pledge to impose reciprocal tariffs on US trading partners, a report showed consumer inflation rising, and Fed Chair Jerome Powell conceded that more work is needed to wring price pressures out of the economy.In the end, none of it landed in markets. The S&P 500 climbed around 1.5%, near records, while 10-year Treasury yields fell for a fifth straight week, in the longest such rally since 2021. Junk bonds ETFs are back to scoring gains, as gauges measuring their volatility versus risk-free rates narrowed.Investors’ willingness to live with significant discomfort is visible in a pair of indexes purporting to track sentiment and geopolitical risk. Bank of America Corp.’s Market Risk indicator — a cross-asset gauge of expected price swings — has fallen into negative territory, a sign that anxiety has vanished. Meanwhile, an “economic policy uncertainty index” kept by a trio of US academics is at levels seen only during the global financial crisis and 2020 pandemic, driven by an uptick in tariff-related headlines.“The January 2025 rise in uncertainty is unprecedented in that it is entirely politically driven,” said Stanford University economics professor Nicholas Bloom, one of its inventors. “Domestic US political uncertainty is impacting countries globally in a way we have never seen before.” 118265560The growing disconnect comes as investors attempt to dissect Trump’s tariff plans around the globe, while mixed inflation and economic data complicates the monetary-easing path.Volatility spikes haven’t vanished per se, but each has faded swiftly — at the fastest pace on record, per one UBS Group AG gauge. It all reflects a legitimate challenge among market participants to price in Trump’s combative trade posture given the near-daily refinement of policy signals. This week’s vow for reciprocal tariffs comes not longer after he delayed threats against Canada and Mexico, signaling to many investors that he won’t take action that enacts lasting damage to Wall Street.“It rests on the assumption of the ‘Trump put,’” said Priya Misra, portfolio manager at JP Morgan Asset Management. “There is a belief that the president will be flexible if there is a significant pullback in credit spreads or equities.”For Charles Lemonides, founder and chief investment officer of ValueWorks, there are still more reasons to be bullish than bearish. Even as the megacap leadership of stock indexes has eased recently, investors have been moving money to other sectors and asset classes rather than bailing out — a sign of strong buying power.“My takeaway is that after a two-year monster rally, markets have spent four months or so digesting the move,” said Lemonides, “and are now more likely poised to surprise on the upside.”

The campaign by President Donald Trump and his adviser Elon Musk to radically cut back the U.S. bureaucracy spread on Friday, firing more than 9,500 workers who handled everything from managing federal lands to caring for military veterans. Workers at the departments of Interior, Energy, Veterans Affairs, Agriculture and Health and Human Services had their employment terminated in a drive that so far has largely - but not exclusively - targeted probationary employees in their first year on the job who have fewer employment protections. The firings, reported by Reuters and other major U.S. media outlets, are in addition to the roughly 75,000 workers who have taken a buyout that Trump and Musk have offered to get them to leave voluntarily, according to the White House. That equals about 3% of the 2.3 million person civilian workforce. Trump says the federal government is too bloated and too much money is lost to waste and fraud. The government has some $36 trillion in debt and ran a $1.8 trillion deficit last year, and there is bipartisan agreement on the need for reform. But congressional Democrats say Trump is encroaching on the legislature's constitutional authority over federal spending, even as his fellow Republicans who control majorities in both chambers of Congress have largely supported the moves. The speed and breadth of Musk's effort has produced growing frustration among some of Trump's aides over a lack of coordination, including White House Chief of Staff Susie Wiles, sources told Reuters. In addition to the job reductions, Trump and Musk have tried to gut civil-service protections for career employees, frozen most U.S. foreign aid and attempted to shutter some government agencies such as the U.S. Agency for International Development and the Consumer Financial Protection Bureau CFPB almost entirely. Almost half of the probationary workers at the U.S. Centers for Disease Control and Prevention and others at the National Institutes of Health are being forced out, sources familiar with the job cuts told Reuters. The U.S. Forest Service is firing around 3,400 recent hires, while the National Park Service is terminating about 1,000, people familiar with the plans said on Friday. The tax-collecting Internal Revenue Service is preparing to fire thousands of workers next week, two people familiar with the matter said, a move that could squeeze resources ahead of Americans' April 15 deadline to file income taxes. Other spending cuts have raised concerns that vital services were in danger. A month after wildfires devastated Los Angeles, federal programs have stopped hiring seasonal firefighters and halted removal of fire hazards such as dead wood from forests, according to organizations impacted by the reductions. Critics have questioned the blunt force approach of Musk, the world's richest person, who has amassed extraordinary influence in Trump's presidency. Treasury Secretary Scott Bessent on Friday shrugged off those concerns, comparing Musk's so-called Department of Government Efficiency to a financial audit. "These are serious people, and they're going from agency to agency, doing an audit, looking for best practices," he told Fox Business Network. Musk is relying on a coterie of young engineers with little government experience to manage his DOGE campaign, and their early cuts appear to be driven more by ideology than driving down costs, budget experts say. 'BETRAYED BY MY COUNTRY'Fired federal workers expressed shock. "I've done a lot for my country and as a veteran who served his country, I feel like I've been betrayed by my country," said Nick Gioia, who served in the army and worked for the Department of Defense for a total of 17 years before joining the USDA's Economic Research Service in December only to be fired late Thursday. "I don't feel like this has anything to do with federal workers, I feel like this is just a game," said Gioia, who lives in Elizabethtown, Kentucky, and has a child with epilepsy. "To sit here and watch people like Mr. Musk tweet out how he feels like he's doing a great job, he doesn't realize what he's doing to people's lives." Steve Lenkart, executive director of the National Federation of Federal Employees union, which represents more than 100,000 workers, said he expects Musk, whose SpaceX businesses has major contracts with the U.S. federal government, and the Trump administration to concentrate on agencies that regulate industry and finance. "That's really what this whole thing is really all about," Lenkart said. "It's getting government out of the way of industry and incredibly rich people, which is why Elon Musk is so excited about this." NUCLEAR CUTS 'PARTLY RESCINDED'Some attempts to fire government employees have been impeded by federal judges or second thoughts. About 1,200 to 2,000 workers at the Department of Energy were laid off, including 325 from the National Nuclear Security Administration, which oversees the nuclear stockpile, sources familiar with the matter told Reuters on Friday. But those layoffs at have been "partly rescinded" to retain essential nuclear security workers, one of the sources said. It was unclear how many of the 325 firings were pulled back. The administration has temporarily agreed not to fire any more staff at the U.S. Consumer Financial Protection Bureau, according to a court order issued on Friday, offering workers there an 11th-hour reprieve ahead of feared mass layoffs. Unions representing federal workers have sued to block the buyout plan. Three federal judges overseeing privacy cases against DOGE heard cases on Friday whether Musk's team should have access to Treasury Department payment systems and potentially sensitive data at U.S. health, consumer protection and labor agencies. In one of those, a federal judge in New York extended a temporary restraining order blocking DOGE from accessing Treasury Department systems. That order had been in place since Saturday.