Retail earnings reports are stronger than expected leaving investors confident.
Key details
Retail stocks are on the rise. Tuesday morning started with Walmart and The Home Depot posting results, with both companies’ shares jumping. Target and Lowe’s are due to report Wednesday. So far, investors are happy with what they are seeing.
Why it’s news
Retailer shares ruled the S&P 500 leaderboard Tuesday as investors’ excitement grew over Walmart and Home Depot’s quarterly earnings. The SPDR S&P Retail exchange-traded fund jumped more than 4% around midday Tuesday.
Walmart shares rose more than 6% today after its earnings were reported. The company reported an 8.4% rise in revenue and adjusted earnings per share of $1.77, compared to the median estimate of $1.62, according to a compilation of analysts by Factset.
“We made good progress throughout the quarter operationally to improve costs in our supply chain, and that work is ongoing,” said CEO Doug McMillon.
Home Depot was not far behind, with shares rising over 5% after its earnings were announced. Earnings per share were $5.05, compared with the median estimate of $4.95 from analysts, according to Factset.
In addition to Walmart and Home Depot, other companies that beat expectations were Target, Bath & Body Works, and Ross Stores. Report earnings from these three companies are expected within the next few days.
Backing up a bit
And this trend may not end anytime soon. “Inflation is starting to fall. If this trend proves sustainable, prices of goods will follow suit, lessening the burden on families,” says Stansberry Research analyst C. Scott Garliss.
“As that happens, the Fed could indicate that it’s considering slowing rate hikes, stopping altogether, or even cutting rates once more…. The dynamic would boost investor optimism as well. A more confident consumer will buy more… In turn, this would support a steady rally in the S&P 500 Index.”
