What happened

Wayfair (W -0.13%) investors beat a rising market this week as shares jumped 28% through Thursday trading compared to a 2% spike in the S&P 500, according to data provided by S&P Global Market Intelligence. Yet that rally only removed part of the online furniture retailer's recent losses. Shares are still down 70% so far in 2022.

The rally likely reflected bargain hunting from investors following those steep stock price losses. It also came as attention turned toward Wayfair's upcoming earnings report.

So what

The main factor driving Wayfair stock higher this week was a rebound in the wider market following steep declines through most of 2022. But there were also a few specific reasons to be a bit more bullish about its business. Investors see a potential ending of certain tariffs on Chinese products, for one, which would benefit Wayfair by reducing prices and easing supply chain challenges.

Wayfair also this week announced the date of its upcoming earnings report, now set for Aug. 4. That report will cover the selling period through late June and is likely to show a continued growth hangover as consumers pull back on home furnishing spending. Wayfair last reported a 23% decline in active users and a 29% dive in order volume.

Now what

Those growth metrics are clearly being depressed in part due to a temporary demand slump following two years of heavy consumer spending on home furnishings. Wayfair's sales and earnings trends should look much stronger once order volumes stabilize after the pandemic-related swings.

The prospect of improving profit trends convinced investors to be more optimistic about the stock this week. Wayfair executives see the business reaching over $100 billion in annual sales by around 2030, after all.

But first the company must start showing progress toward stabilizing its growth rate. If it does reveal slowing sales declines in early August, the stock could build on this week's rally.