Highly-anticipated earnings reports from Walmart and Home Depot are due to be released this week, with investors looking to use these retail giants’ financial results to gauge the economic direction of the country. Both sets of results are expected to be released before the market opens on Tuesday.
Walmart’s and Home Depot’s performances are expected to provide a clear insight into the current health of the U.S. consumer, especially given the enormity of both retail chains’ customer bases. Most notably, economists are looking to determine the effects of inflation on consumer spending power, particularly after retail sales rose in January despite resilient inflation.
Another focal point that investors will keep an eye on is the Personal Consumption Expenditures (PCE) price index. As the Federal Reserve’s most closely-watched tool to track price rises across the country, investors will expect the PCE to dictate the Fed’s interest rate policy going forward.
In January, the PCE Index posted a 0.5% rise in prices over the previous month. This compares to a rise of just 0.1% in December. In January, year-over-year PCE inflation is expected to come in at 5%, showing no improvement from the same period in 2022.