Stock futures rise after strong retail sales, Walmart and Home Depot earnings

Stock futures gained Tuesday morning, with traders digesting key new economic data on the state of the consumer after a couple of major retailers topped quarterly earnings results. Contracts on each of the S&P 500, Dow and Nasdaq pointed to higher opens.

New monthly retail sales data from the Commerce Department showed better-than-expected consumer spending trends heading into the holiday season. The total value of U.S. retail sales rose by 1.7% in October compared to September, topping expectations for a 1.4% rise, according to Bloomberg consensus data. The print was closely watched as an indicator of overall economic strength, given consumption comprises about two-thirds of U.S. economic activity.

Earnings results from retail juggernaut Walmart (WMT) further underscored solid shopping trends among American consumers. The company’s closely watched U.S. comparable same-store sales grew 9.2% over last year in the third quarter, and by 15.6% compared to the same period in 2019, to exceed estimates for growth of 7%, according to Bloomberg consensus data. E-commerce sales also held up and grew by a better-than-expected 8%, compared to the 1.9% rise expected, even as more consumers returned to in-person shopping. Shares of Walmart rose in early trading following the report, and shares of peers including Target and Costco rose in sympathy. 

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Home Depot (HD), meanwhile, also posted better-than-expected sales and earnings results as the company continued to see “elevated home improvement demand,” CEO Craig Menear said in Home Depot’s earnings statement. Comparable sales grew 6.1% compared to the 1.5% rise anticipated, and the stock closed in on a record high in pre-market trading. 

These reports came at the tail 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 earnings results, according to FactSet.

The slew of better-than-expected corporate profits, coupled with still-accommodative monetary policy support, have helped power stocks to record highs throughout the year, and pushed the S&P 500 up by nearly 25% so far in 2021. These factors have also helped investors continue to push through concerns over persistently elevated inflation — though the stickiness of these rising prices remains a closely watched risk for investors. 

“We have a stock market that’s been on an absolute tear despite high inflation,” Michael Darda, MKM Partners chief economist, told Yahoo Finance Live. “That’s not aways 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’re up 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 those high inflation readings. That doesn’t necessarily mean the market is going to continue to soar on a go-forward basis. I think it’s really going to come down to the future path of market interest rates and how the Fed maneuvers moving forward, because they will be moving into a tightening cycle probably before many forecasters assumed that they would.”

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7:25 a.m. ET Tuesday: Stock futures rise ahead of retail sales, and as Walmart and Home Depot top estimates

Here’s where markets were trading ahead of the opening bell: 

• S&P 500 futures (ES=F): +3 points (+0.06%), to 4,682.00

• Dow futures (YM=F): +64 points (+0.18%), to 36,073.00

• Nasdaq futures (NQ=F): +9.5 points (+0.06%) to 16,197.25

• Crude (CL=F): +$0.39 (+0.48%) to $81.27 a barrel

• Gold (GC=F): +$8.50 (+0.46%) to $1,875.10 per ounce

• 10-year Treasury (^TNX): -0.1 bps to yield 1.611%

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6:15 p.m. ET Monday: Stock futures edge higher as the overnight session kicks off

Here’s where markets were trading Monday evening:

• S&P 500 futures (ES=F): +1.75 points (+0.04%), to 4,680.75

• Dow futures (YM=F): +16 points (+0.04%), to 36,025.00

• Nasdaq futures (NQ=F): +6.5 points (+0.04%) to 16,194.25

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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter