Market Minute

During the pandemic, the lockdown orders boosted Home Depot (HD) as people turned their attention—and stimulus money—to DIY projects and fixes. Now, inflation and interest rates remain high, keeping people locked into their lower rates and less likely to move. However, the rising financial pressure is pushing these kinds of projects to the back burner. Home Depot saw customer transactions, comparable sales, and the average ticket fall year-over-year in the first quarter and reported a miss on revenue estimates. The company cited a lack of the aforementioned larger discretionary projects, but also blamed a late start to spring.

However, the company reaffirmed its full-year guidance, and CEO Ted Decker said Home Depot is still growing market share. The company also has yet to close on SRS Distribution, which it agreed to acquire for $18.25 billion in March, its biggest deal ever. SRS Distribution provides roofing materials and building supplies, which would allow Home Depot to push further into the contractors and professionals market. Overall, the market doesn’t seem unhappy with the report—shares are up slightly before the bell.

Looks like another busy week ahead for investors and traders, let’s take a market minute to get ahead of what you should be keeping an eye on. We begin with economic data due out this week and how the focus will primarily be on inflation with the Producer Price Index (PPI) due out Tuesday and Consumer Price Index (CPI) on Wednesday. The figures will provide further insight and help traders determine what’s to come in terms of rate cuts this year from the Fed. This week we also have Retail Sales, Industrial Production, some regional manufacturing data from the Philly Fed, and a handful of Fed speakers to keep an eye on. 

In terms of earnings, it’s all about retail this week with Home Depot (HD), Walmart (WMT), Baidu (BIDU), JD.com (JD), and Under Armour (UAA) all opening their books to investors. We also have a few tech names to keep an eye on; we’ll hear from Cisco (CSCO), Applied Materials (AMAT), and Take Two (TTWO). All of which will help us get a better understanding of how the consumer is holding up in this higher for longer environment. 

Speaking of higher for longer, we begin the week with the yield on the 10-year treasury note around 4.5% and the 2-year near 4.8%; stocks have largely shrugged this off as earnings have helped market participants focus on the positive and discount the negative. It will be key to watch and see if the names mentioned above continue to provide that environment this week for the bulls. The S&P 500 is on a three-week run, and the Dow is up eight days in a row headed into the open this morning. 

Lastly keep an eye on crude oil this week the WTI starting off the week below $80 a barrel and helping ease inflation concerns. Still at stubbornly elevated levels, but well off recent highs we saw a few weeks ago near $90.