What happened
Shareholders of Wayfair (W 2.35%) beat the market this week as the stock rose 13% through Thursday trading. That boost compared to a 2.3% rally in the S&P 500, according to data provided by S&P Global Market Intelligence. It only erased a small part of recent losses for the home furnishings retailer, though, whose stock is still down over 80% so far in 2022.
Wayfair benefited from rising optimism about the economy, and from specific hopes about its upcoming earnings report.
So what
Bank of America was one of the first big banks to issue third-quarter results this week, and its report eased fears that consumers were pulling back their spending. Growth here has slowed, the company said, but remains elevated. The bank's stock rose, along with many hard-hit tech stocks.
Wayfair executives cited macroeconomic pressures in their last earnings report, in early August. The selling environment was difficult, they said, due to supply chain challenges, inflation, and softening spending rates.
Investors are worried that these trends will continue or worsen over the coming quarters. Yet an improvement in that outlook was enough to push the stock higher this week.
Now what
Investors won't have to wait long for more clarity about Wayfair's business; the company will issue its third-quarter results on Nov. 3. We'll learn from that update whether the business is still losing customers and generating net losses in the wake of big pandemic-related growth in 2020 and early 2021. It's also possible that the company will be more cautious about its long-term outlook.
Executives had said that they could see an opportunity for the business reaching over $100 billion in annual sales by the early 2030s. However, annual sales are on pace to fall for the second straight year in 2022, to below $14 billion. The stock isn't likely to see a sustained rally until that core growth trend reverses itself.
