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Retail sales, Walmart earnings, More Fedspeak: What to know this week

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The retail sector will be in focus this week after a wild string of trading sessions on Wall Street, with quarterly financials from megastore Walmart (WMT) and other consumer giants in the queue, and April’s retail sales report scheduled for release Tuesday.

Investors will also tune in for more remarks from Federal Reserve officials including Chair Jerome Powell in the week ahead for further clues on the central bank’s interest rate hiking plans as inflation continues to run hot across the U.S. economy.

Friday capped the sixth straight down week for U.S. equities after a vicious streak of selling as renewed concerns over persistently elevated price levels and the prospect of an economic slowdown stirred up further turbulence in markets. The major indexes rallied to turn positive in the previous session but remained near 2022 lows after the S&P 500 fell to hover near bear market territory – defined as a close of at least 20% from a recent record high – for much of the week.

“The question remains as to whether this rally signifies the end of the selling,” LPL Financial Chief Equity Strategist Quincy Krosby said in a note, adding analysts will be watching 200-day moving averages and whether resistance levels are pierced. “Moreover, although price action is key, volume to the upside would suggest buyer interest at these levels.”

“Given the history of bear markets, coupled with the fact that the Fed has just begun its rate hike cycle and would like to see financial conditions continue to tighten so that demand pulls back further, this rally will most likely weaken,” Krosby added.

Inflation and Fedspeak

Sharp gyrations across the major indexes coincided with two key inflation reports last week that stoked worries among market participants of the possibility surging price levels have shifted from being “transitory” to becoming “entrenched” in the U.S. economy.

The Producer Price Index (PPI) out Thursday showed an 11% year-over-year rise in wholesale prices last month, with the rate leveling only marginally from March's all-time high rate of 11.5%, while Wednesday’s Consumer Price Index (CPI) reflected another red-hot reading of 8.3% year-over-year.

"The markets have been volatile but we haven’t reached the bottom yet,” Bruderman Asset Management equity analyst Akshata Bailkeri told Yahoo Finance. “The Federal Reserve has already indicated that they have flexibility in dealing with inflation numbers as they come in."

The market also digested remarks from Fed officials in response to the latest inflationary snapshots out of Washington. In an exclusive interview with Yahoo Finance Live on Wednesday, Federal Reserve Bank of St. Louis President James Bullard said that high readings worry central bank policy makers and reinforce the need for higher interest rates.

“Inflation is broader and more persistent than many have thought and the Fed will have to act in order to keep inflation under control and we’ve got a plan in place,” Bullard said in the interview.

Last week, Atlanta Fed President Raphael Bostic and Cleveland Fed President Loretta Mester both told Yahoo Finance that 0.50% moves were their baseline expectations through at least the June and July meetings, and signaled a hike of 0.75% was on the table.

Investors will have more Fedspeak to mull in the coming days, with Fed chief Jerome Powell set to speak at a conference hosted by the Wall Street Journal conference Tuesday afternoon, and speaking engagements from other central bank officials slated to take place through Friday.

Washington, DC - May 12 : Federal Reserve Chairman Jerome Powell arrives for a meeting with Sen. John Cornyn, R-Texas, hours after being confirmed by the Senate to serve as the Federal Reserve Chair for a second term on Thursday, May 12, 2022 in Washington, DC. (Photo by Jabin Botsford/The Washington Post via Getty Images)
Washington, DC - May 12 : Federal Reserve Chairman Jerome Powell arrives for a meeting with Sen. John Cornyn, R-Texas, hours after being confirmed by the Senate to serve as the Federal Reserve Chair for a second term on Thursday, May 12, 2022 in Washington, DC. (Photo by Jabin Botsford/The Washington Post via Getty Images)

“The inconvenient truth is the Fed is going to need to raise rates more quickly and to a higher level than many were hoping,” Independent Advisor Alliance Chief Investment Officer Chris Zaccarelli said recently in an emailed note. “There will be at least four 50 bps rate hikes this year and not three or less and we will continue to be cautious with risk assets.”

Retail in focus

On the earnings front, a bevy of quarterly reports from retail heavyweights are likely to offer insight on the state of U.S. inflation and how consumers are coping with rising prices.

Walmart, the biggest retailer in the U.S., is scheduled to release results before the market opens Tuesday. The company is expected to post adjusted earnings of $1.48 per share on revenue of $139.23 billion, a drop of 12% for its adjusted EPS with revenue up 1% from the same period last year, according to Bloomberg consensus estimates.

The mega retailer expects full-year net sales growth of about 3% and same-store sales of above 3% excluding fuel. Operating income growth of about 3% is expected, while e-commerce growth is expected to come in muted at about 1.9%, compared to 37% growth last year with more consumers shopping in physical stores amid a return to in-person activities.

The seven largest stocks in the S&P 500 as of the index’s all-time high on January 3 lost a combined $3.2 trillion in market cap since that date, according to data from Bespoke Investment Group. While most have seen big declines, Walmart has been one of few gainers – up 2.35% year-to-date as of Friday’s close.

BRAZIL - 2022/03/30: In this photo illustration, a woman's silhouette holds a smartphone with the Walmart logo displayed on the screen and in the background. (Photo Illustration by Rafael Henrique/SOPA Images/LightRocket via Getty Images)
BRAZIL - 2022/03/30: In this photo illustration, a woman's silhouette holds a smartphone with the Walmart logo displayed on the screen and in the background. (Photo Illustration by Rafael Henrique/SOPA Images/LightRocket via Getty Images)

Financials from other big retail names including Home Depot (HD), Target (TGT), Lowe's (LOW) and Macy's (M) are also on the calendar.

Elsewhere in a busy week for retail numbers, the Commerce Department’s monthly retail sales report for April set for release Tuesday is expected to show retail sales likely increased 1.0% last month compared to 0.5% in March, with the headline number excluding autos estimated to come in up 0.4%, compared to 1.1 during the prior month, per Bloomberg consensus data.

“There was a big sequential contraction in gas spending as prices leveled off from record high levels in March, which weighed down headline and excluding-auto measures,” Bank of America analysts wrote in a recent note. “Netting out auto, gas, building materials and restaurants, core control sales should jump by solidly, suggesting continued strength in goods spending.”

Economic calendar

Monday: Empire Manufacturing, May (15.0 expected, 24.6 during prior month), Net Long-Term TIC Outflows, March ($141.7 billion during prior month), Total Net TIC Outflows, March (162.6 billion during prior month)

Tuesday: Retail Sales Advance, month-over-month, April (1.0% expected, 0.5% during prior month, upwardly revised to 0.7%), Retail Sales excluding autos, month-over-month, April (0.4% expected, 1.1% during prior month, upwardly revised 1.4%), Retail Sales excluding autos and gas, month-over-month, April (0.7% expected, 0.2% during prior month, upwardly revised to 0.7%), Retail Sales Control Group, April (0.8% expected, -0.1% during prior month, upwardly revised to 0.7%), Industrial Production, month-over-month, April (0.5% expected, 0.9% during prior month), Capacity Utilization, April (78.5% expected, 78.3% during prior month), Manufacturing (SIC) Production, April (0.4% expected, 0.9% during prior month), Business Inventories, March (1.9% expected, 1.5% during prior month), NAHB Housing Market Index, May (75 expected, 77 during prior month)

Wednesday: MBA Mortgage Applications, week ended May 13 (2.0% during prior week), Housing starts, April (1.760 million expected, 1.793 million during prior month), Housing starts, month-over-month, April (-1.8% expected, 0.3% during prior month), Building permits, April (1.812 million expected, 1.873 million during prior month, downwardly revised to 1.870 million), Building permits, month-over-month, April (-3.1% expected, 0.4% during prior month, downwardly revised to 0.3%)

Thursday: Philadelphia Fed Business Outlook Index, May (16.5 expected, 17.6 during prior month), Initial jobless claims, week ended May 14 (200,000 expected, 203,000 during prior week), Continuing claims, week ended May 7 (1.330 million expected, 1.343 during prior week),

Existing Home Sales, April (5.63 million expected, 5.77 million during prior month), Existing Home Sales, month-over-month, April (-2.5% expected, -2.7% during prior month), Leading Index, April (0.0% expected, 0.3% in during prior month)

Friday: No notable reports scheduled for release

Earnings calendar

Monday

Before market open: Warby Parker (WRBY), Weber (WEBR), Ryanair (RYAAY), AngloGold (AU)

After market close: Take-Two Interactive (TTWO)

Tuesday

Before market open: Walmart (WMT) at 7:00 a.m. ET, Home Depot (HD), JD.com (JD), Vodafone (VOD), Baidu (BIDU), Trip.com (TCOM)

After market close: No notable reports scheduled for release

Wednesday

Before market open: Analog Devices (ADI) at 7:00 a.m. ET, TJ at 9:30 a.m. ET Maxx (TJX), Lowe’s (LOW), Target (TGT)

After market close: Cisco (CSCO), Bath & Body Works (BBWI)

Thursday

Before market open: BJ’s Wholesale Club (BJ), Kohl’s (KSS), Eagle Materials (EXP)

After market close: Ross Stores (ROST) at 4:00 p.m. ET, Palo Alto Networks (PANW), VF Corp (VFC) at 4:05 p.m. ET

Friday

Before market open: Deere (DE), Foot Locker (FL)

After market close: No notable reports scheduled for release

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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