Retail on the radar this week: Earnings, sales and price tags

This week is all about retail, especially for investors who are hoping to get a better assessment of the U.S. economy. Kicking off the festivities on Tuesday will be earnings from Home Depot (NYSE:HD), with comparable sales shedding a spotlight on the current spending habits of the American consumer. Walmart (NYSE:WMT) will also report quarterly results on Thursday, the same day that July’s retail sales data will be published.

Speaking of macro: Nervousness has been present in markets since July’s weak jobs report that highlighted rising unemployment. It helped volatility spike last week, and while stocks have since recovered from a major selloff, the situation remains fragile. Fears could reignite if there are further hints of a slowdown, especially since consumer spending accounts for more than two-thirds of the economy, but the figures could also provide reassurance if the numbers go the other way.

The same situation will play out tomorrow. A hot consumer price index report could push stagflation fears back into the market and even cause a resurgence in recession worries. On the other hand, easing price pressures would calm investor nerves and may provide a relief rally, especially if positive retail earnings heat things back up. A report by the New York Fed on Monday also showed the three-year inflation consumer outlook hitting a record low, which will be yet another factor in expectations about whether the Fed will embark on a rate cut cycle as soon as next month.

SA commentary: “We may see more volatility in the days ahead, as bears attempt to sway investor sentiment by wrangling over how each economic report is either inflationary or recessionary, but they are likely to be failed attempts to breathe life into a narrative that has fallen flat for nearly two years now,” wrote Investing Group Leader Lawrence Fuller. “If you forecast a recession or an end to the bull market, you will eventually be right, as both are natural stages of each economic and market cycle. If you are early by a year or more, then you are not doing anyone any favors, including yourself.”

More on the retail landscape

• Latest Consumer Goods and Retail Stock Analyses
• With A Quiet Earnings Week, Economic Data Takes Over – Buy The Dip
• This Week’s CPI Report Could Be A Disaster For The Market
• Walmart Earnings Preview: E-Commerce And New Biz Ventures Could Be More Lucrative Than Thought
• Home Depot: Priced For Perfection Heading Into Q2 Earnings