Doors Swing Open on Q1 Retail Earnings Season

As the unofficial start to retail earnings season arrives this week, investors face a tangle of conflicting or confusing signals that might be distilled in a single question: Will the real U.S. consumer please stand up?

Quarterly numbers from Home Depot (HD) and Walmart (WMT) this week and other big retailers in the weeks ahead may help answer that question.

Consumers are still spending, just on different and perhaps cheaper things—"trading down" in industry parlance. In recent months, they've also grown increasingly weary of high interest rates and persistent inflation, but they still want nice things like vacations and home furnishings (more on the retail big picture below).

That should make the impending slate of retail earnings of keen interest to those seeking further insights into the health of the consumer, and by extension, the U.S. economy. The unofficial start to the Q1 retail earnings season began this week with Home Depot reporting results before Tuesday's market open. The company's earnings surpassed expectations but fell short of revenue forecasts, illustrating ongoing struggles among home improvement retailers as high interest rates burden consumers and housing.

Walmart, the biggest U.S. retailer by sales, is scheduled to report results Thursday.

As the retail earnings season unfolds, there are several storylines worth following.