What happened

Wayfair (W -0.41%) investors trounced a soaring market last month. Shares jumped 24% in July, according to data provided by S&P Global Market Intelligence, compared to a 9.1% surge in the S&P 500. That rally only erased a small portion of the losses that shareholders in the e-commerce giant have seen so far in 2022. Wayfair stock remains down 70% this year, compared to a 14% decline in the wider market.

Wayfair's July spike was powered by a rebound in some of the hardest hit tech stocks on the market. But it will be tested soon, with fiscal second-quarter earnings results due out in just a few days.

So what

The main factor driving Wayfair's stock higher was a surge in the tech-heavy Nasdaq index, which soared 12% higher in July. A few companies whose stocks have been battered, like Netflix, announced surprisingly strong earnings results that suggested the wider 2022 growth-stock sell-off may have gone too far.

Like Netflix, Wayfair is enduring a growth hangover right now as consumers shun many of the spending categories they had prioritized in earlier phases of the pandemic. Yet the stock's slump since early January might be pricing in too much bad news on that score. July's rally can be seen in a more optimistic light as a sign that Wayfair's growth is likely to become positive in the near future. 

Now what

Investors won't have to wait for an answer to that demand question. Wayfair is set to announce fiscal Q2 earnings results on the morning of Aug. 4, in fact.

Yes, there are some warning signs in the retailing industry. Walmart recently told investors that consumers are spending less thanks to inflation and that retailers are under pressure to cut prices in order to keep inventory moving. Wayfair doesn't face as much inventory pressure due to its asset-light selling model that relies on partners to produce and store many of its products. But this week's earnings announcement might still show sluggish earnings and sales trends.

The stock might continue rising if executives predict stabilizing growth trends in the second half of the year. Wayfair is aiming to grow into over $100 billion in annual sales by 2031. Yet that yearly total was stuck at $14 billion for the past two years .

Shares might remain pressured until the company can show a clear path back toward expanding sales following the current growth hangover.