By Kate Gibson
The U.S. stock market is keeping close tabs this week on
financial results from major retailers, the final large market
group to issue their quarterly reports -- with a recent rally in
the sector setting the expectations bar high.
"The recent price action of many large retailers suggests
expectations for good news from these companies is high, thus any
slight disappointment could translate into a quick pullback in
these names which spills more broadly across the market," Fred
Dickson, chief market strategist at Davidson Co., wrote Wednesday
in a note to a clients.
On Wednesday, consumer discretionary shares, which account for
9.3% of the S&P 500 Index's market capitalization, were among
those advancing as the major indexes rallied more than 1%.
The Dow Jones Industrial Average (DJI) added 115.78 points, or
1.3%, to 9,357.23. The S&P 500 (SPX) gained 11.42 points, or
1.2%, to 1,005.77, while the Nasdaq Composite (RIXF) rose 29.82
points, or 1.5%, to 1,999.55.
"The retailers have had a near-40% rally off the lows and these
reports could be the fuel to drive stocks higher, or pull them
back," Dan Greenhaus, recently named chief economic strategist at
Miller Tabak, wrote in a research note.
"Attention should be paid to the likes of Macy's Inc. and Ethan
Allen Interiors Inc. (ETH) among others to see if any progress is
expected with respect to consumer behavior," said Greenhaus.
"Over the next couple of days we will get a better picture of
the health of the nation's retailers as several big ones report
second-quarter earnings, including Wal-Mart Stores Inc., Kohl's
Corp. and Nordstrom Inc. ," said Jacob Meyer, an equity analyst at
D.A. Davidson & Co.
"We expect to see these retailers meet or beat analysts'
earnings estimates as a result of cost cutting," Meyer added.
Wal-Mart, part of the Dow industrials, will report financial
results for the second quarter ended July 31 on Thursday at about 7
a.m. Eastern time, according to a company release.