Earnings results from major retailers in the coming weeks will test the strength of the U.S. stock market rally, as investors gain insight into the health of consumer spending and the fallout on company bottom lines from inflation.
As a tepid fourth-quarter results season comes to an end, Walmart and Home Depot are set to report in the coming week, with other high-profile retailers including Best Buy and Lowe’s due the following week.
How consumers are faring amid soaring prices will be a critical topic for investors, as some have become more confident that the economy will be able to avoid a severe downturn even as the Federal Reserve continues hiking rates to tamp down inflation.
One sign of economic resilience came in the past week, when monthly data showed U.S. retail sales increased by the most in nearly two years in January.
“The retail sales numbers were reasonably strong, and we want to see that confirmation come from the retailers themselves,” said Paul Nolte, market strategist at Murphy and Sylvest Wealth Management.
Nolte is considering buying home-improvement retailer stocks that were hit hard in 2022 as the housing market struggled.
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