Retail Focus

Key Takeaways

• Big Week For Retail Earnings
• Government Tax Prep Service?
• Debt Ceiling Concerns Linger

Markets closed out Friday much the same they started Monday. For the week, the S&P 500 was down 0.3% while the Nasdaq Composite gained 0.4%. Although there were a number of earnings last week, there were few household names reporting. This week; however, we’ll hear from some big name retailers that will offer insights into consumer spending habits and how inflation is affecting those habits.

Tomorrow before the open, Home Depot will report earnings. They’ll be followed later this week by Target
TGT
and then Walmart
WMT
. We’re also going to get the latest read on Retail Sales tomorrow morning. I’m very interested in hearing what these companies have to say looking forward and their outlook for the overall economy.

While many feel the Fed is done raising interest rates, the forward looking guidance provided by big name retailers will go a long way in shining a light on whether or not the Fed is on track to achieve its sought after soft landing. Aside from the companies scheduled to report this week, we also have members of the Fed speaking throughout the week. I’m curious if any of them say anything that moves the market or changes the market’s perception of what the Fed will do next. Currently, there is about an 80% chance the Fed will sit tight when they meet in June.

Speaking of government, the Wall St. Journal is reporting this morning that the IRS is considering creating a government run tax preparation option. The idea is to offer a competitor to companies such as H&R Block
SQ
and TurboTax. Government officials argue these private companies are charging middle income earners a fee for a service that should be free. News of this proposal sent shares of Intuit
INTU
down 5% in premarket, while shares of H&R Block were indicated down nearly 10%.

In other individual stock news, Newmont Mining
NEM
agreed to purchase Newcrest Mining in a deal valued at $17.5 billion. The deal will be the largest ever deal done in the gold mining industry. This merger follows a spate of activity in the sector as commodity prices have been climbing. It will also increase Newmont’s strength in copper, a commodity in greater demand because of its utility in both electric vehicles and windmills.

Finally, last week marked the sixth straight week where the S&P 500 moved less than 1%. That is the longest streak in four years. My take on that is markets are unsure what to do at the moment. We have a debt ceiling issue and subsequent deadline to get something done, hanging over our heads. Questions about inflation also continue to loom, making the Interest rate situation unclear. President Biden and Republican leaders are expected to meet this week with hopes they can reach a compromise that will at least put the debt ceiling issue to rest. In the meantime, I would continue sticking with your investment plan and long term objectives.

tastytrade, Inc. commentary for educational purposes only. This content is not, nor is intended to be, trading or investment advice or a recommendation that any investment product or strategy is suitable for any person.