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What's taking the greatest toll on consumers?

In their quarterly reports, companies like Home Depot (HD), Starbucks (SBUX), and eBay (EBAY) have noted that consumers are beginning to pull back and become more discretionary with their spending. Walmart (WMT) reported growth in its eCommerce business, although in an interview with Yahoo Finance, Walmart CFO John David Rainey noted consumers' wallets are "stretched."

Yahoo Finance Anchors Madison Mills and Seana Smith discuss the state of the consumer.

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Nicholas Jacobino

Video transcript

Walmart brings us to the big story that we're watching today, which is the state of the consumer from retail sales to company earnings.

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We see mixed reactions to high prices coming from inflation.

But those Walmart sales there often and the company says consumers are trading in that they're not calling it trade down as consumers across income contributed to the retailers, higher sales here.

But that is not the universal story.

Companies like Home Depot, Starbucks, mcdonald's, Etsy and ebay all showing signs of consumer weakness.

Yahoo Finance spoke to all of T DC, senior research analyst about the state of the consumer.

Here's what he had to say.

We see the bifurcated consumer, a pressured consumer at the low and middle end and a consumer who's balancing more expensive needs, bottom line, a consumer is under pressure.

So there continues to be boss optimism, cautious optimism shot.

But with Wal Mart in particular, raises the question is what's good for Walmart actually good for the economy because it can be a sign of consumers trading down.

Now having said that a really interesting stat from Wal Mart, they say that overall inflation levels for the business were up about 40 basis points for the quarter.

That is half the rate of increase we saw last year, but that's obviously still an increase, even slowing inflation, it's still inflation.

And we have seen some that consumers are starting to get tired of inflation across the board with other retailers.

We are certainly we're seeing shoppers going for value.

Wal Mart clearly benefiting from that.

You can see it in these results here.

You can see it even if you just take a look at the share price right now.

We are at record highs.

We're seeing this move to the upside today.

We also spoke with the CFO of Wal Mart, John David Marin last hour asking him about his sense of the consumer, what he is seeing at Wal Mart even here in the current quarter.

And he highlighted the fact that wallets are still stretched, they're looking for value, they're using discretion when they're buying those higher income items.

And he also said that he remains confident that Wal Mart will be able to continue to attract that higher income consumer once inflation ups.

And I think that's one of the big questions out there for analysts right now, whether or not we are going to see that higher consumer continue to shop at Wal Mart once inflation hopefully isn't as big of an issue for millions of Americans as it is today.

But he did really highlight the fact that consumers do remain under a bit of pressure, Walmart clearly benefiting from that.

And also I want to highlight one of the other points that stuck out to me within this report were the inventory levels that didn't improve here for the most recent quarter.

They are shaping up nicely here for Wal Mart and that's also fueling some of that optimism for the stock as well.

Yeah, it's a great point too that he spoke to you guys about that.

It's not trade down that they're seeing.

It really is a higher consumer liking Walmart stuff.