Dow Futures Rise: Is the Consumer Back?

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

The Dow Jones Industrial Average (DJINDICES: ^DJI  ) is looking to catch its breath today. Stock index futures as of 7:20 a.m. EDT pointed to a slightly higher opening a day after the market plunged 1.47%. Since reaching its fresh high two weeks ago, the Dow is lower by about 3.3% -- but it still sits 15% above where it began this year.

Consumers will be in focus today, as the monthly Reuters/University of Michigan Consumer Sentiment Index is set for release at 9:55 a.m. EDT. That gauge is expected to climb to 85.5 after reaching its best July reading since 2007 last month, and it should add to the positive view we've been getting of the U.S. shopper lately. Data released yesterday showed that employment is improving: New weekly unemployment claims hit the lowest level since 2007.

But that recovery hasn't been felt broadly across retailers this earnings season. Sure, automakers and home improvement stores are ringing the register. Ford set an eight-year sales record last month, logging its best July retail performance since 2005. And Home Depot (NYSE: HD  ) saw comparable sales climb by 5% in the first quarter. The company is even expected to improve on that performance by notching a scorching 7% sales gain when it reports second-quarter earnings next week.

On the other hand, Wal-Mart announced shrinking sales in the U.S. yesterday and warned that its customers are being extremely cautious on spending. Macy's (NYSE: M  ) , while reporting its first sales decline in almost four years on Wednesday, had it right when it remarked, "Consumers seem to be choosing to make purchases in non-department store categories such as cars, housing, and home improvement." Still, shoppers can't focus on big-ticket items forever. Both Macy's and Wal-Mart expect a better second half of the year, beginning with the back-to-school season this fall.

Finally, chip maker Applied Materials (NASDAQ: AMAT  ) could see active trading today. The company reported earnings after the closing bell yesterday that were slightly below estimates. It saw strengthening demand for its semiconductor and display equipment thanks to a spiking appetite for mobile devices and large-screen TVs. Still, the company expects flat sales next quarter and slightly lower profit than Wall Street had hoped for as it shifts spending toward research and development. Shares are down about 0.6% in premarket trading.

To learn about two retailers with especially good prospects, take a look at The Motley Fool's special free report: "The Death of Wal-Mart: The Real Cash Kings Changing the Face of Retail." In it, you'll see how these two cash kings are able to consistently outperform and how they're planning to ride the waves of retail's changing tide. You can access it by clicking here.


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