Stock futures rose Tuesday morning, with traders waiting for important new economic data on the consumer’s condition after a pair of major retailers topped quarterly results. Contracts for each of the S&P 500, Dow and Nasdaq pointed to higher openings.
Investors are set to receive monthly retail sales data from the trading department later Tuesday morning, which will help show how much speed consumers had on their way into the Christmas trading season. The printout is expected to show that retail sales increased by 1.5% in October compared to September, accelerated from last month̵[ads1]7;s cut of 0.7%, according to consensus data from Bloomberg.
As usual, the report will be closely monitored as an indicator of overall economic strength, given that consumption accounts for about two-thirds of US economic activity.
“October was significantly better than September as cases of Delta variants were eased and service recovery was resumed with credit card and mobility data pointing to another solid gain in the control group’s retail sales,” wrote Wells Fargo chief economist Sam Bullard in a note. “In addition, employment growth was strong last month, which helped support our October sales call.”
“All that being said, consumer confidence has come under pressure in the face of accelerating inflation as evidenced by last week’s University of Michigan sentiment collapse and could provide a significant headwind in spending as we enter the Christmas shopping season,” he added. “On that note, we will keep an eye on whether consumers withdrew holiday spending into October from November and December in anticipation of supply chain problems and rising prices.”
Revenue results from retail juggernaut Walmart (WMT) underlined solid shopping trends among U.S. consumers. The company’s closely monitored comparable store sales in the US grew 9.2% compared to last year in the third quarter, and by 15.6% compared to the same period in 2019, to exceed the projections for growth of 7%, according to consensus data from Bloomberg. E-commerce sales also held up and grew by 8% better than expected, compared to the expected increase of 1.9%, even as more consumers went back to personal shopping. Shares of Walmart rose in early trading after the report, and shares of peers including Target and Costco rose in sympathy.
Home Depot (HD), meanwhile, also posted better-than-expected sales and revenue results as the company continued to see “increased demand for home improvement,” said Home Depot CEO Craig Menear. Compared sales grew by 6.1% compared with expected growth of 1.5%, and the share reached a record high in pre-market trading.
These reports came at the end of what has already been an exceptionally strong earnings season. As of Friday, 92% of S&P 500 companies had reported actual results, and of these, 81% of them had reported better-than-expected results, according to FactSet.
A number of better-than-expected corporate profits, combined with continued monetary policy support, have helped power stocks record highs throughout the year, pushing the S&P 500 up almost 25% so far in 2021. These factors have also helped investors continue to push through. Concerns about sustained rising inflation – although fixed prices are still a risk for investors who are closely monitored.
“We have a stock market that has been on an absolute tear despite high inflation,” Michael Darda, chief economist at MKM Partners, told Yahoo Finance Live. “It has not always been the case historically, but it has this time around, and I think for a set of very specific reasons.”
“One is that market interest rates are still extremely low on a historical basis, even though they are up from year to date from where they were in January,” he said. “Liquidity levels are high and companies have a lot of pricing power, so profits have been very strong despite the high inflation readings. That does not necessarily mean that the market will continue to rise in the future. I think it will really come down on the future path. for market interest rates and how the Fed is maneuvering forward, because they want to move into a tightening cycle, probably before many forecasters assumed they would. “
7:25 am ET Tuesday: Stock futures rise ahead of retail sales, which Walmart and Home Depot top
Here is where the markets traded before opening:
S&P 500 futures (ES = F): +3 points (+ 0.06%), to 4,682.00
Dow futures (ÅM = F): +64 points (+ 0.18%), to 36,073.00
Nasdaq futures (NQ = F): +9.5 points (+ 0.06%) to 16 197.25
Rough (CL = F): + $ 0.39 (+ 0.48%) to $ 81.27 per barrel
Gold (GC = F): + $ 8.50 (+ 0.46%) to $ 1,875.10 per ounce
10-year Treasury (^ TNX): -0.1 bps to give 1.611%
18:15 ET Monday: Stock futures rise higher when the session starts overnight
Here is where the markets traded Monday night:
S&P 500 futures (ES = F): +1.75 points (+ 0.04%), to 4,680.75
Dow futures (ÅM = F): +16 points (+ 0.04%), to 36,025.00
Nasdaq futures (NQ = F): +6.5 points (+ 0.04%) to 16 194.25
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter