Retailers set for earnings stage after inflation-sparked market turbulence
Skip to main content
  • Home
  • Economy
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Splash
  • Features
  • Videos
  • Long Read
  • Games
  • Epaper
  • More
    • COVID-19
    • Bangladesh
    • Infograph
    • Interviews
    • Offbeat
    • Thoughts
    • Podcast
    • Quiz
    • Tech
    • Subscribe
    • Archive
    • Trial By Trivia
    • Magazine
    • Supplement
  • বাংলা
The Business Standard
FRIDAY, MAY 20, 2022
FRIDAY, MAY 20, 2022
  • Home
  • Economy
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Splash
  • Features
  • Videos
  • Long Read
  • Games
  • Epaper
  • More
    • COVID-19
    • Bangladesh
    • Infograph
    • Interviews
    • Offbeat
    • Thoughts
    • Podcast
    • Quiz
    • Tech
    • Subscribe
    • Archive
    • Trial By Trivia
    • Magazine
    • Supplement
  • বাংলা
Retailers set for earnings stage after inflation-sparked market turbulence

Global Economy

Reuters
14 May, 2021, 10:45 pm
Last modified: 14 May, 2021, 10:48 pm

Related News

  • What needs to be done now?
  • Inflation gobbles up overtime income of RMG workers: Sanem survey
  • World shares sink after inflation driven retreat on Wall St
  • Investors jolted as US retailers show inflation hitting consumers
  • 'Food inflation is an unavoidable consequence of currency devaluation'

Retailers set for earnings stage after inflation-sparked market turbulence

The S&P 500 fell 4% from Monday through Wednesday, the biggest three-day swoon for the benchmark index since late October, after several months of largely calm and steady increases to record highs, although it partially rebounded at the end of the week

Reuters
14 May, 2021, 10:45 pm
Last modified: 14 May, 2021, 10:48 pm
Shoppers ascend and descend escalators at the King of Prussia Mall, owned by Simon Property Group, in King of Prussia, Pennsylvania, U.S., December 8, 2018. REUTERS/Mark Makela/File Photo
Shoppers ascend and descend escalators at the King of Prussia Mall, owned by Simon Property Group, in King of Prussia, Pennsylvania, U.S., December 8, 2018. REUTERS/Mark Makela/File Photo

Earnings reports from major retailers will be in focus next week after the US stock market suffered one of its biggest pullbacks in months, with investors looking for clues on the pace of inflation and consumer spending and whether companies can sustain their strong earnings momentum.

The S&P 500 fell 4% from Monday through Wednesday, the biggest three-day swoon for the benchmark index since late October, after several months of largely calm and steady increases to record highs, although it partially rebounded at the end of the week.

Investors are zeroing in on inflationary concerns as the potential spark for greater turbulence after data showed consumer prices rose in April by the most in about 12 years. On the heels of a surprisingly weak jobs report, the retailers' reports will offer the latest insight on how the economy is faring as businesses rebound from the coronavirus pandemic.

"There's a few more worries for investors today than there were a couple weeks ago," said James Ragan, director of wealth management research at D.A. Davidson.

Stocks rebounded somewhat on Thursday and Friday, putting the S&P 500's gain for the year at more than 10%. The Cboe Volatility Index (.VIX) - known as Wall Street's fear gauge - moved lower but was still above most of the past month's levels.

Data on Friday showed US retail sales unexpectedly stalled in April, shifting the focus to companies for their views on the state of consumer spending.

Walmart Inc (WMT.N), the world's biggest retailer, is set to release quarterly results on Tuesday. Reports from big box retailer Target Corp (TGT.N) and home improvement companies Home Depot Inc (HD.N) and Lowe's Cos Inc (LOW.N) - which are the three largest companies by market value in the S&P 500 retailing index (.SPXRT) after Amazon (AMZN.O) - are also due next week.

Other retailers set to report include Ralph Lauren (RL.N), TJX Cos (TJX.N) and L Brands (LB.N), owner of Victoria's Secret and Bath & Body Works.

Inflation concerns will be at the forefront. Higher inflation could crimp consumer demand and company profit margins or force the Federal Reserve to tighten monetary policy.

Following data this week showing sharp increases for consumer and producer prices, retailers could face questions on whether sticker shock is putting off shoppers, how they are handling higher costs and whether they are raising wages for their employees.

"It will be interesting to see one, how much they are able to pass the costs along, and two, are these higher costs starting to impact demand?" said Jack Ablin, chief investment officer at Cresset Capital Management. "Nothing that I have seen suggests they are, but perhaps something that maybe a Home Depot or Lowe's says may change that view."

With the United States loosening coronavirus restrictions, investors will want to see signs of an economic rebound reflected in the reports, including whether stimulus checks sent by the federal government to Americans are boosting sales.

"I would look for confirmation that the stronger mobility and economic activity that we saw in the first quarter actually translated into spending for some of these retail companies," said Anthony Saglimbene, global market strategist at Ameriprise Financial. "The outlooks from these companies should be fairly positive."

So far, first-quarter earnings have supported the historically expensive valuations for stocks, which have incorporated expectations of an economic recovery this year.

With over 90% of S&P 500 companies having reported, overall earnings are expected to have climbed 50.6% from a year ago, according to Refinitiv IBES. The consumer discretionary sector (.SPLRCD), which includes many retailers, is seeing profits jump 191.3%, the biggest rise of any sector.

Walmart, which is part of the consumer staples sector, saw its revenue soar to $560 billion in its latest fiscal year as people stocked up on groceries during the pandemic. Analysts expect the company to post a 2.2% rise in earnings for its latest quarter, according to Refinitiv.

Home Depot and Lowe's are both expected to see their quarterly earnings jump by about 45% from a year ago, as investors look for updates from the companies on the state of the housing market and the impact of higher lumber prices.

"The market is really pricing in companies beating estimates," Ragan said. "So if retailers are a little more cautious because of some inflationary pressures perhaps that they see out there, then that could derail the earnings growth story just a little bit."

World+Biz

retailers / inflation / market turbulence

Comments

While most comments will be posted if they are on-topic and not abusive, moderation decisions are subjective. Published comments are readers’ own views and The Business Standard does not endorse any of the readers’ comments.

Top Stories

  • US growth seen outpacing China’s for first time since 1976
    US growth seen outpacing China’s for first time since 1976
  • BNP misinterpreting PM's comment over Padma Bridge: Quader
    BNP misinterpreting PM's comment over Padma Bridge: Quader
  • Transparency International Bangladesh
    TIB calls for independent Economic Strategy Advisory Committee

MOST VIEWED

  • US growth seen outpacing China’s for first time since 1976
    US growth seen outpacing China’s for first time since 1976
  • A worker displays grains of wheat at a mill in Beirut, Lebanon, March 1, 2022. REUTERS/Mohamed Azakir/File Photo
    Russia can offer 25 mln tonnes of grain for export starting on 1 Aug: UN envoy
  • A model of the natural gas pipeline is seen in front of displayed German and Russian flag colours in this illustration taken April 26, 2022. REUTERS/Dado Ruvic/Illustration
    Fearing Russian cutoff, German industry braces for gas rations race
  • A man walks past a Nationwide Building Society in London, Britain, May 22, 2019. REUTERS/Hannah McKay
    Britain's Nationwide annual profit nearly doubles
  • Protestors stand on a water cannon vehicle as they shout slogans during a protest organised by students near the President's House, amid the country's economic crisis, in Colombo, Sri Lanka, May 19, 2022. REUTERS/Adnan Abidi/File Photo
    'We are going to die': Sri Lanka warns of food shortages
  • A woman walks past the International Monetary Fund (IMF) logo at its headquarters in Washington, US, 10 May 12018. Photo: REUTERS
    IMF urges Asia to be mindful of spillover risks from tightening

Related News

  • What needs to be done now?
  • Inflation gobbles up overtime income of RMG workers: Sanem survey
  • World shares sink after inflation driven retreat on Wall St
  • Investors jolted as US retailers show inflation hitting consumers
  • 'Food inflation is an unavoidable consequence of currency devaluation'

Features

Mohammad (Mejbah) Mejbahuddin, Former Senior Secretary, Economic Relations Division (ERD), Ministry of Finance, Government of Bangladesh. TBS Sketch

‘No project is being delayed too long at the moment’

6h | Panorama
Dr Shamsul Hoque, Professor, Civil Engineering, BUET. TBS Sketch

‘Planning commission only in the name, there are no planners’ 

6h | Panorama
Masrur Reaz. TBS Sketch

‘To ensure accountability, contract financing should be based on ‘performance based payments’

6h | Panorama
Professor Mustafizur Rahman. Illustration: TBS

Project delays and escalating costs are driven by frequent revisions and lack of good governance

9h | Panorama

More Videos from TBS

Ways to retain body fragrance

Ways to retain body fragrance

7h | Videos
Gazipur restaurant that serves 150 food items

Gazipur restaurant that serves 150 food items

11h | Videos
How to prepare for a job

How to prepare for a job

12h | Videos
Putin's strategies to face Nato

Putin's strategies to face Nato

1d | Videos

Most Read

1
Tk100 for bike, Tk2,400 for bus to cross Padma Bridge
Bangladesh

Tk100 for bike, Tk2,400 for bus to cross Padma Bridge

2
Representative Photo: Pixabay.
Bangladesh

Microplastics found in 5 local sugar brands

3
Mushfiq Mobarak. Photo: Noor-A-Alam
Panorama

Meet the Yale professor who anchors his research in Bangladesh and scales up interventions globally

4
A packet of US five-dollar bills is inspected at the Bureau of Engraving and Printing in Washington March 26, 2015. REUTERS/Gary Cameron
Banking

Dollar hits Tk100 mark in open market

5
The story of Bangladesh becoming a major bicycle exporter
Industry

The story of Bangladesh becoming a major bicycle exporter

6
PK Halder: How a scamster rose from humble beginnings to a Tk11,000cr empire
Crime

PK Halder: How a scamster rose from humble beginnings to a Tk11,000cr empire

The Business Standard
Top
  • Home
  • Entertainment
  • Sports
  • About Us
  • Bangladesh
  • International
  • Privacy Policy
  • Comment Policy
  • Contact Us
  • Economy
  • Sitemap
  • RSS

Contact Us

The Business Standard

Main Office -4/A, Eskaton Garden, Dhaka- 1000

Phone: +8801847 416158 - 59

Send Opinion articles to - oped.tbs@gmail.com

For advertisement- sales@tbsnews.net

Copyright © 2022 THE BUSINESS STANDARD All rights reserved. Technical Partner: RSI Lab