Retail earnings set to steer S&P 500: WMT, HD, LOW and TGT

Retail earnings are the main focus of the US stock market this week as some investors have taken precautions ahead of a significant interest rate event on Friday. The market is laser-focused on Friday's keynote speech from Jerome Powell, Chair of the Federal Reserve (Fed), at the Jackson Hole economic conference. Further hawkish rhetoric could spur a sell-off as the market is betting heavily on an interest rate cut at the Federal Open Market Committee's (FOMC) meeting in September.

In the run-up to that speech, the market will hinge this week on earnings from The Home Depot (HD), Walmart (WMT), Target (TGT), Lowe's (LOW) and Dollar Tree (DLTR).

All three main US indices are trading slightly lower on Monday afternoon as markets await news of US President Donald Trump's meeting with European leaders and diplomats over a possible peace plan between Ukraine and Russia. US Treasury yields have been rising for much of the session as well.

Retail earnings on the docket

The Home Depot is the first up on Tuesday, delivering its Q2 results before the open. HD stock has been rising of late, but the market is aware that Q1's slight slump in comparable sales might bleed into Q2 as well. Wall Street is expecting $4.69 in adjusted EPS on $45.31 billion in revenue. This amounts to a 5% YoY rise in revenue and a 2% increase in profit.

Competitor Lowe's comes next on Wednesday before the opening bell. Wall Street has many of the same concerns as The Home Depot, regarding soft consumer demand coupled with low turnover in the housing market. Wall Street projects $4.24 in adjusted EPS on $23.96 billion in sales, which amounts to a slower annual gain of 3.3% on profit and 1.6% on revenue in comparison to The Home Depot.

Target arrives in tandem with Lowe's before Wednesday's open. Wall Street expects the Walmart competitor to earn $2.04 in adjusted EPS on $24.91 billion. This amounts to a 21% slide from a year earlier as analysts expect Target's heavy reliance on foreign suppliers to bite into margins due to the Trump tariffs. Revenue is projected to fall 2% from a year earlier.

Walmart then finishes off the week with its premarket release on Thursday. Wall Street analysts have a consensus of $0.74 in adjusted EPS on $174.25 billion in sales. Almost certainly the healthiest company among this lot, those estimates would mean a 10% YoY gain on sales and a 4% gain on profit per share. Walmart sources a large majority of its products from within the US, so the company is less disadvantaged by tariffs.

Fitch Ratings estimates that effective US tariffs are 16% rather than 17% since more Mexican and Canadian goods are exempt under a prior trade treaty.

S&P 500 (candlestick) YTD performance compared to Walmart (green), Home Depot (crimson), Lowe's (purple) Target (blue)