American retailers take center stage: investors look for signals on the economy's future

In the upcoming week, Wall Street's attention will be focused on earnings reports from the largest US retail chains — crucial indicators of how changing trade conditions are impacting the economy and whether the recent stock market surge is built on solid ground.

Trade truce eases anxiety, but questions remain Among the companies reporting quarterly results are retail giants Target, Home Depot, and Lowe's. Their reports come as fears of a recession, previously stoked by President Donald Trump's tariff policy, have begun to ease. Hope has been rekindled by the latest trade truce between the US and China, the two largest economies in the world.

Walmart sounds the alarm: brace for price increases However, a Thursday statement from Walmart brought tension back to the market. The world's largest retailer warned that it would be forced to raise prices due to increased tariffs. This has prompted investors to scrutinize other retailers' reports to see how they're adapting to the volatile trade environment — and how that's affecting their profits and strategic direction.

Tariffs as a driver of uncertainty Markets remain under pressure amid the threat of new tariffs. These could not only raise product prices but also dampen consumer spending, the main engine of the US economy. Concerns intensified following Trump's April 2 announcement of sweeping new duties tied to the so-called "Liberation Day."

The consumer as an economic barometer Retail earnings may offer a key to understanding current consumer behavior, which accounts for more than two-thirds of US GDP. Whether consumers are spending or saving will determine how resilient the economy is amid geopolitical turbulence.

Retail sales lose steam Recent data confirm that Americans are becoming more cautious: retail sales growth slowed significantly in April. The disappearance of the "pre-storm stockpiling" effect, previously driven by tariff fears, played a major role. At the same time, consumer sentiment remains sluggish, as confirmed by recent surveys.

Retail landscape: from luxury to discounts More earnings are on the horizon: clothing icon Ralph Lauren and discount chain operator TJX Companies, owner of TJ Maxx and similar brands, will also report. Their results will help assess how different consumer segments are faring, from brand lovers to bargain hunters. Investors are looking for the full picture: who's losing and who's winning amid market volatility.

Wall Street bounces back: market returns to the game After a sharp drop triggered by Trump's aggressive remarks on April 2, the market has shown surprising resilience. The S&P 500 index not only recovered but surged more than 18% from its April lows, fully erasing losses accumulated since the beginning of the year. This rebound may serve as a litmus test: is the economy really ready to move forward, or is it just a temporary boost fueled by political promises?

China: a warning signal from the East Amid US optimism, worrisome news came from Asia. Retail sales in China unexpectedly declined, highlighting the pain of transitioning from an export-driven economy to one reliant on domestic consumption. This isn't just data — it's a signal that China isn't yet ready to be a global consumer powerhouse, which keeps global trade vulnerable.

Fewer toys ahead: Trump resets priorities True to his unconventional style, Donald Trump hinted to Americans that the era of cheap imported goods is coming to an end. "Fewer dolls and pencils" isn't just a metaphor — it marks a shift in direction. US trade policy is now aimed not only at pressuring China but also at reshaping domestic consumption. Meanwhile, Trump wants China to increase purchases of American goods.

America's choice: fair deals or tariffs The US Treasury Secretary issued a harsh critique of foreign partners, declaring they must play by "fair rules" or brace for greater tariff pressure. He also hinted that the White House's attention is limited to just 18 key countries. Others will have to fight for a spot in line — or risk being left "out in the cold."

A new tariff ceiling: taxation without legislation The effective import tariff in the US has now reached 13% — the highest since the Great Depression. In essence, this acts as a hidden tax equivalent to 1.2% of GDP. The White House hopes that giants like Walmart will absorb the costs rather than pass them on to consumers. But how long they can hold the line remains an open question.

Tariffs as a tool: the White House seeks funds for grand promises Trump's administration is using tariffs not just as leverage in international trade but also as a domestic revenue source. One goal: help fund a massive tax relief package that recently advanced through the House Ways and Means Committee and may soon go to a vote.

The price of promises: up to $5 trillion in debt over ten years The president's tax initiative is expected to be extremely costly. Analysts estimate it could add $3 to $5 trillion to the US national debt over the next decade. Such a sharp increase in fiscal deficit hasn't gone unnoticed: Moody's has followed other agencies in downgrading the US.credit rating, signaling growing market concern.

Trust erodes: global investors on edge These developments haven't gone unnoticed in global markets. Foreign investors, already wary of Washington's chaotic and unpredictable policies, reacted swiftly. On Monday morning, futures on major Wall Street indices dropped by more than 1%, a clear sign of rising anxiety over new fiscal and political risks.

Bonds and the dollar moving out of sync While stock markets began to lose ground, the yield on 10-year US Treasury bonds jumped about five basis points — a sign of rising inflation expectations and potential tightening of financial conditions. The US dollar also reacted, albeit modestly, slipping slightly in response to diminishing confidence in the sustainability of America's fiscal position.