Wall Street will navigate a series of corporate earnings and data releases focused on the strength of the U.S. consumer this week as investors look to test the resilience of fading stock rally that has clipped some 2.7% from the S&P 500 so far this month.
Big box retailers Home Depot (HD) -), Target Corp (TGT) -) and Walmart (WMT) -) are slated to provide July quarter updates this week, with investors likely focused on the prospects for near-term sales as consumers struggle with rising gas prices, soaring mortgage rates and the end of a moratorium on student loan payments that could take some $100 billion out of retail spending over the coming year.
The Commerce Department will also publish its estimate for July retail sales on Tuesday at 8:30 am Eastern time, with economists looking for a 0.4% gain as nominal receipts from gas station sales, linked to a surge in prices, boosts the overall spending tally.
Housing starts and building permits data, expected Wednesday before the start of trading, will also provide another glimpse into the state of the housing sector as mortgage rates soar past 7% amid the Federal Reserve's hawkish inflation stance and a broader tightening of credit conditions in the wake of the regional banking crisis earlier this spring.
On the earnings front, around 17 S&P 500 companies are expected to publish second quarter update this week as the reporting season draws to a close.
With more than 90% of the S&P 500 reporting so far, collective second quarter profits are likely to fall 3.8% from last year to a share-weighted $448 billion. That tally is expected to improve over the three months ending in September, however, when profits are likely to rise 1.3% to $463.7 billion, according to Refinitv forecasts.
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