RBC Strategist Highlights Concerns Over US Consumer Spending Ahead of Retail Earnings

Lori Calvasina, head of US equity strategy at RBC Capital Markets, has raised concerns regarding the resilience of American consumers as the retail earnings season approaches. She notes that discretionary spending is under pressure due to tariff impacts and declining consumer sentiment, suggesting that these factors are beginning to affect consumer behavior.

Despite these concerns, Calvasina remains optimistic about the overall US stock market. She has set a year-end target for the S&P 500 between 7,750 and 8,150, indicating confidence in the earnings potential of large-cap companies. Her analysis distinguishes between strong corporate earnings and softening consumer confidence, highlighting a divergence in the current economic landscape.

Calvasina identifies consumer discretionary stocks as higher-risk compared to more stable consumer staples, a distinction that is particularly relevant as major retailers prepare to report their earnings. She emphasizes that the upcoming reports will be critical in assessing the strength of consumer spending and may reveal whether the issues she has identified are more structural in nature.

The retail earnings reports are expected to provide insights into same-store sales performance, margin pressures from tariffs, and any downward guidance revisions from retailers. The results will likely vary based on each company's reliance on import-heavy supply chains and the demographics of their customer base.

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Source: KLEA News