Walmart, Target earnings will reveal how tariffs are shaping US spending

Walmart, Target, Home Depot, and Lowe’s are all set to report this week, delivering the clearest look yet at how inflation and tariffs are reshaping U.S. consumer behavior — and what that means for the broader economy.

Why Q2 is likely to be more revealing than Q1

First-quarter results offered only limited visibility into President Donald Trump’s second-term tariff blitz, launched in early April, as many companies were still working through pre-tariff inventory that helped shield margins. This meant the fallout was mostly telegraphed in executive commentary , not evidenced in the numbers.

But now that cushion is disappearing. As retailers cycle through higher-cost goods, strike new supplier deals, and get a look at freshly imposed tariff rates, this quarter is likely to reveal just how much power they really have to keep costs down or pass them on. As results filter in throughout the week, Wall Street will also get a glimpse at whether consumers are willing — or able — to foot the bill, as some chains look to pass on the higher prices to Americans across the income spectrum.

DIY retailers up first

Home Depot and Lowe’s will kick things off Tuesday and Wednesday, respectively, with investors watching for signs of a possible rebound after a somewhat disappointing spring . Credit card data shows Home Depot’s sales were largely flat year-over-year , while Lowe’s eked out modest gains.

Both chains are seeing demand skew toward professionals rather than homeowners, as high mortgage rates — still hovering near 7% — freeze the housing market and suppress big-ticket DIY purchases among individual households.

Target and Walmart up next

Target, reporting Wednesday, is arguably in an even tougher spot. High-income customers are pulling back, store traffic is falling, and margins are under pressure. Last quarter’s results missed the mark , and the company is facing growing price sensitivity just as it's being asked to absorb rising costs. Its affluent, discretionary-heavy customer base — a strength in boom times — has more recently become a liability as trade wars, inflation, and recession fears encourage customers to tighten their belts, not open their wallets for impulse purchases.

Walmart, for its part, looks to be thriving amidst the chaos. Earnings are due Thursday, and investors expect more gains in grocery and essential items like socks and shampoo, especially as higher-income shoppers trade down amid amid macro uncertainty. Long a deflationary force in U.S. retail, Walmart has recently begun raising prices. This shift is likely to have broad implications because, as the nation’s largest retailer, Walmart’s moves may give competitors permission to follow suit.

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Retail stocks' performance largely lags the market

While Walmart's stock is up 10% year to date, Target, Home Depot, and Lowe's have not been so fortunate. Shares of Target have fallen some 23% thus far in 2025. Shares of the nation's largest DIY retailers have fared better, even as they've underperformed the broader market, rising around 2%, respectively, against the S&P 500's 10% gains.

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