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Retail Earnings Will Set the Tone for the Week

|Includes: GPS, Home Depot, Inc. (HD), JCP, KSS, LB, M, SHLD, SKS, TGT, TJX, WMT

There are more than twenty retail companies announcing earnings this week and they will have the attention of Wall Street. Some analyst are questioning how much upside is left in retail? Looking at XRT, SPDRs Retail ETF it is easy to see the sector has advanced nicely in the current uptrend. The consensus is for a move higher with the consumer willing to spend more than previous anticipated. These comments relative to consumer optimism and a positive outlook are driving the stocks higher.

After consolidating for nearly eight weeks the sector started higher after January sales data showed better than expected consumer spending. Same store sales were ahead of expectations for most. Specialty retailers are expected to outshine the big box retail stores. Walmart starts the earnings parade Tuesday before the market opens. expectations aren’t great as they continue to struggle. Tiffany’s, J.C. Penny’s and TJ Maxx have been the most active relative to analyst comments. The data will give insight into revenue, margins and outlook for the coming quarter. If investors are looking for a catalyst to define direction this could be the spark, good or bad.

One major concern is the price of crude has moved back above $89 on the increased geopolitical issues in the Middle East. Gasoline is now at $3.15 on average across the U.S. and raises a concern relative to the consumers discretionary spending. The impact to household expenses is being felt across the country with prices rising more than 30% since August. Throw in the rising food cost and the optimism relative to the consumer could get short circuited.  

Other retail news to watch this week includes Apple as shareholders look for answers on management issues in the absense of Steve Jobs. The stocks was under pressure Friday as rumors filtered through the media about Jobs health. Markets don’t like uncertainty and there is plenty around the companies future leadership.

Some Key Reports to Watch:
Tuesday: Home Depot (NYSE:HD), Macy’s (NYSE:M), Walmart (NYSE:WMT)
Wednesday: TJ Maxx (NYSE:TJX), Saks (NYSE:SKS), Limited Brands (LTD), Dollar Tree (DTR)
Thursday: Kohl’s (NYSE:KSS), Target (NYSE:TGT), Sears (NASDAQ:SHLD), Gap (NYSE:GPS)
Friday: J. C. Penny’s (NYSE:JCP)

Today is a holiday for the U.S. Markets, thus updates will resume on Tuesday to the Watch and Play List.