The stock market held its own on Monday, and that seemed to give investors more confidence heading into Tuesday's trading session. After such a big drop in recent months, more optimistic market participants are looking for signs that some of the tough conditions that have hit markets lately could start to subside. As of 8:30 a.m. ET, futures on the Dow Jones Industrial Average (^DJI 0.47%) were up 364 points to 32,523. S&P 500 (^GSPC -0.66%) futures had gained 59 points to 4,064, while Nasdaq Composite (^IXIC -1.51%) futures had jumped 225 points to 12,470.
A couple of major retailers reported their financial results Tuesday morning, and although many of the same challenges face both of them, their stock prices moved in opposite directions. Home Depot (HD 0.53%) got a boost as demand for home improvement materials remained strong, but Walmart (WMT -0.18%) shares moved sharply lower as its customers felt inflationary pressures.
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There's no place like Home Depot
Shares of Home Depot moved higher by nearly 4% in premarket trading on Tuesday. The home improvement retail giant managed to sustain extremely high sales levels and boosted its guidance for the remainder of the year.
Home Depot's first-quarter financial results showed more strength than many investors had expected. On its face, revenue growth of 4% year over year to $38.9 billion might have seemed slow, with comparable sales up 2.2% overall and 1.7% in the U.S. market. However, Home Depot saw extremely sharp gains related to the COVID-19 pandemic in the year-earlier period, making comparisons very difficult. Net income inched higher as well, with earnings of $4.09 per share moving 6% higher from year-ago levels.
In addition, Home Depot thinks 2022 will go better than it initially expected. The company now sees sales rising about 3% for the full year, with mid-single-digit percentage gains in earnings per share. In other words, the home improvement retailer believes it will be able to sustain roughly the same pace of business performance that it did in the first quarter.
Many have feared Home Depot wouldn't be able to avoid shrinking revenue as conditions normalize in the coming year. However, with homeowners and professional contractors still coming through with strong demand, it now appears the company will keep up its forward momentum for a while longer.
Walmart faces cost pressures
On the other side of the retail coin, Walmart shares were down more than 6% in premarket trading. The big-box department store giant saw continued growth, but cost pressures on both its internal operations and on the customers who spend money at its stores weighed on its performance.
Walmart's first-quarter numbers were mixed. Revenue rose 2.4% to $141.6 billion, with comparable sales in the U.S. rising 3% year over year and 9% from where they were two years ago. The Sam's Club unit saw particularly strong gains of more than 10% in comps, and Walmart's global advertising business saw growth of more than 30%. However, increased wage costs in the U.S. sent operating income falling 23% to $5.3 billion. Earnings of $0.74 per share were similarly down 24% year over year.
Walmart also made changes to its guidance for the full year. The retail giant sees sales growth of 4% for the year, up from previous forecasts for 3% gains. However, while Walmart previously expected to see earnings per share rise by mid-single-digit percentages, it's now looking for a roughly 1% decrease in its bottom line for the year.
Inflation has hit Walmart customers hard, and higher labor costs reflect the current job market Walmart faces. That's not unique to Walmart, and it'll be interesting to see how other retail stocks do at handling the challenges they're facing now.
