Retail Sector in Focus During Shaky Week on Wall Street

The S&P 500 Index and Nasdaq Composite are on track to snap four-week win streaks

Earnings reports from several big-name retailers highlighted this week, along with plenty of economic data. Monday started out strong, with the Nasdaq Composite (IXIC) marking its highest close since April 21. The market extended its rally into Tuesday, and the Dow Jones Industrial Average (DJI) logged its longest win streak since late May. Stocks lost steam on Wednesday, however, amid data showing retail sales fell flat for July. Plus, the U.S. Federal Reserve’s July meeting minutes revealed the central bank plans to move forward with aggressive interest rate hikes. Stocks struggled for direction on Thursday, finishing with muted gains after better-than-expected initial jobless claims data and a sharp drop in existing home sales for July. At midday on Friday, the major benchmarks are firmly in the red, with the S&P 500 Index (SPX) and Nasdaq on track to snap four-week win streaks. 

Retail Earnings

Walmart (WMT) and Home Depot’s (HD) top- and bottom-line earnings beats gave the market a boost on Tuesday, particularly as WMT surged, with both stocks seeing an increase in bullish options volume. Lowe’s (LOW), Target (TGT), and TJX (TJX) were a few of the names stepping into the earnings confessional the following day, though results were certainly not as strong. Target’s results in particular added to Wall Street’s weakness on Wednesday. Kohl’s (KSS) and Foot Locker (FL) announced their quarterly results this week as well, with Macy’s (M) set to report early next week. 

Analyst Adjustments

Poshmark (POSH) rebounded from its post-earnings slump on Monday after an upgrade from Barclays, while a downgrade from J.P. Morgan Securities sank Vroom (VRM) stock. Also this week, Cardinal Health (CAH) and Mattel (MAT) received bull notes, while Zoom Video Communications (ZM), Verizon (VZ), and Facebook-parent Meta Platforms (META) moved lower after bear notes. 

End of August Stays Busy

There is still plenty of economic data on deck next week, with investors eyeing the S&P purchasing managers’ index (PMI), as well as the latest personal consumption expenditures (PCE) price index. Though earnings season has cooled down, there are still several reports due out as well. In the meantime, Schaeffer’s Senior Quantitative Analyst Rocky White has highlighted a key consumer strength indicator for traders to watch.