Stock Market Recap: Key Moves for Week of Feb 26, 2023

Kyle Prevost, editor of Million Dollar Journey and founder of the Canadian Financial Summit, breaks down this week’s financial headlines and explains what they mean for Canadian investors.

Groceries and electricity profits shine for investors—not so much for consumers

Several Canadian blue‑chip companies released quarterly results this week, producing a mixed bag for investors and consumers alike.

Loblaw’s fourth‑quarter profit—roughly $52 million—and about a 10% year‑over‑year revenue increase drew media attention because of ongoing concerns about grocery inflation. While shareholders welcomed the better‑than‑expected results, Loblaw’s chief financial officer stated these outcomes suggest retail prices are not outpacing costs and that the company is not exploiting inflation to boost profits. He also said gross margins on food retail peaked in mid‑2021 and have been trending down since.

Those explanations may be hard to sell to consumers who are still feeling rising grocery costs firsthand.

In utilities and energy, Emera posted a strong quarter and appears to have regulatory approval to pass through some cost increases to consumers. By contrast, TransAlta reported an accounting loss when analysts had expected a profit. The company attributed the net loss to higher depreciation and amortization after accelerating useful lives on certain gas‑segment facilities, increased operations, maintenance and administrative (OM&A) expenses, and higher income tax expense related to U.S. adjustments. In plain terms: revenues rose, but accounting items and tax adjustments produced a reported loss. Investors reacted by trimming the stock price modestly.

Teck Resources struggled after missing expectations, citing lower copper and zinc prices as key reasons. The company also announced plans to spin off its coal‑based steelmaking business, a move that weighed on the share price.

So, you want to be a millionaire?

Nick Maggiulli examined where millionaires keep their wealth, and his analysis offers several useful insights for investors.

Key observations include:

• Many millionaires hold substantial cash balances.
• Asset allocation showed surprisingly little change over the measured five‑year period.
• Average millionaires do not rely heavily on exotic alternatives such as hedge funds or private equity.

Maggiulli’s conclusions emphasize that most millionaires don’t attempt to time markets. Instead, they favor diversification within asset classes and maintain meaningful equity exposure. Younger millionaires tend to prefer passive investing, while ultra‑high‑net‑worth investors (those with very large portfolios) allocate more to alternative investments than those with lower net worth. Importantly, access to alternative investments has not guaranteed superior results for the wealthy groups that used them.

At first glance, the conservative tilt—especially the high cash allocation—may look suboptimal. But considering many millionaires are near or in retirement, a more defensive portfolio mix becomes understandable. The broader takeaway is straightforward: consistent saving, broad diversification, and sustained equity exposure have been reliable contributors to building wealth over time.

Walmart and Home Depot see consumer storm on the horizon

U.S. retail giants reported solid quarterly figures but warned of softer consumer demand ahead. Highlights for the quarter (U.S. dollars):

Walmart beat expectations, but the company’s CFO warned that consumers remain under pressure, savings have declined, and fuel costs may hinder margin expansion. Despite that cautionary tone, Walmart continues to outperform many peers and has sustained U.S. same‑store sales growth through and after the pandemic.

Home Depot also reported a small earnings beat but issued softer guidance. The retailer noted a multi‑year shift away from goods and back toward services, a trend that could dampen demand for its products. That warning led to a notable drop in Home Depot’s share price, marking its first revenue miss since 2019.

Meanwhile, Bed Bath & Beyond’s turmoil continues. The Canadian arm has closed all 54 stores and entered insolvency, while the U.S. business faces default issues and bankruptcy considerations. The episode reinforces a basic market truth: speculative, momentum‑driven gains without underlying fundamentals tend to reverse.

Intel swoons on dividend cuts while Nvidia soars on A.I. frenzy

Semiconductor results were polarized. Intel cut its dividend sharply, reducing the payout by about 65%, which followed executive compensation reductions. Some analysts viewed the move as financially prudent, and the stock recovered modestly afterward.

On the other hand, Nvidia continues to benefit from explosive interest in artificial intelligence. The company’s strong positioning in A.I. and positive earnings momentum sent its share price sharply higher, reflecting investor enthusiasm for firms exposed to the growing A.I. market.

Inflation watch: Shipping containers

One clear indicator of the consumer shift from goods to services since the pandemic is the fall in shipping container costs. Container rates have declined roughly 85% from pandemic peaks and are now below pre‑pandemic levels, signaling a major reduction in transportation costs for manufactured goods.

Transportation is a significant portion of final goods costs: shipping raw materials to factories and finished products to retailers. Lower oil prices and sharply reduced container rates translate into meaningful cost savings for goods. With roughly 90% of global goods transported by sea and a year‑over‑year decline in goods demand, these developments apply disinflationary pressure to the consumer price basket.

Global shipping companies used pandemic windfalls to expand capacity, which further dampens the likelihood of near‑term price spikes in freight. If the services sector eventually follows suit and sees comparable disinflation, central bankers and consumers alike would welcome lower overall inflation and less front‑page alarm over rising prices.

Kyle Prevost is a financial educator, author and speaker. When he’s not on a basketball court or in a boxing ring trying to recapture his youth, you can find him helping Canadians with their finances at MillionDollarJourney.com and through the Canadian Financial Summit.