Retail Sales, Walmart Earnings, Home Depot: 3 Things to Watch

This post was originally published on this site — Stocks wobbled on Monday ahead of a key economic data report and amid worries about a looming recession despite the Federal Reserve’s efforts to tame inflation.

Retail sales come out Tuesday morning, and analysts will be looking for signs that spending picked up not just because prices are moving higher. Spending, which makes up two-thirds of economic output, is a key measure of the health of the economy just as the Fed moves to raise interest rates. It is widely expected to continue to raise its benchmark rate by half-point increments at the next two meetings.

In addition to retail sales numbers for April, investors will start to see quarterly earnings from the retail sector, beginning Tuesday with Walmart and Home Depot . Target (NYSE:TGT) follows later this week and the department stores after that.

Consumers have faced rising prices of food and fuel, and the worry is that at some point it will discourage them from spending and spark a slowdown. Already there have been signs that consumers are making tradeoffs between spending on household goods and spending on services such as dining out and travel.

Treasury Secretary Janet Yellen is in Europe this week for the Group of Seven meetings that began Wednesday, but already she has promised to release an action plan on global food supplies. Food prices have spiked since Russia invaded Ukraine, and wheat spiked 6% on Monday to its highest level in two months. Finance ministers worry that a prolonged conflict in Ukraine, which is breadbasket to much of the world, will make food insecurity even worse, especially in developing markets. Adding to the stress, India said it wouldn’t export wheat, amid rising prices there and hot weather.

Here are three things that could affect markets tomorrow:

1. Retail sales

The April report on retail sales will get a lot of attention when it comes out at 8:30 AM ET on Tuesday. Analysts tracked by expect the month over month number to gain by 0.9%.

2. Walmart earnings

Giant discount retailer Walmart Inc (NYSE:WMT) leads off earnings reports for the sector, with analysts looking for EPS of $1.47 on revenue of $138.8 billion.

3. Home Depot earnings

The home improvement retailer Home Depot Inc (NYSE:HD) is expected to report EPS of $3.68 on revenue of $36.6 billion. Home Depot and its competitors are also proxies for the health of the home construction market.