All eyes are on NVIDIA’s earnings this Wednesday, but don’t forget Walmart’s report on Thursday. Walmart is expected to show solid same‑store sales growth, while many other retailers face pressure from higher energy costs and picky shoppers. Target, on the other hand, reported encouraging numbers for February‑April.
Beyond this week’s earnings, the Consumer Staples Select Sector SPDR ETF (XLP) has quietly put together a strong Q2 rally, even when the broader market is weak.
Defensive Leaders Return
Over the past month, XLP has joined the Technology (XLK) and Energy (XLE) ETFs in beating the S&P 500. The defensive consumer niche is not the only bright spot, though.
The consumer staple sector looks like a small, focused part of today’s market. It lacks broad breadth, but it still finds support near its early‑November 2025 low. Since mid‑2025, it has shown a thin layer of relative strength, especially from early January to mid‑February during the earnings season.
Walmart Acts Like a Mega‑Cap Tech Stock
Walmart (WMT) is trading well ahead of its fiscal Q1 2027 earnings on Thursday. It was one of only 20 S&P 500 stocks that closed at a 52‑week high the day before earnings, pushing its market cap above $1 trillion.
The chart shows a strong uptrend. The 200‑day moving average is rising, indicating that bulls control the main direction. An ascending triangle is forming, which could push the price higher if earnings beat expectations. A price target around $155 can be estimated from the triangle’s height, starting from a breakout near $135.
The RSI sits in the 60s. A move above 70 after a breakout would confirm the rally. If the stock falls, look for support near $127, where the 50‑day moving average and the trend line intersect.
Walmart Is Not a Typical Staples Stock
Unlike pure‑play staples such as Philip Morris (PM), Procter & Gamble (PG), or Coca‑Cola (KO), Walmart runs a massive technology platform and uses AI in its operations. This tech focus helped the company move to the Nasdaq‑100 earlier this year.
Costco Thrives in a K‑Shaped Economy
Costco (COST) also broke out to new highs, passing the $1067‑$1078 resistance zone. While Walmart leans on AI, Costco serves higher‑income shoppers who keep spending even when gas prices rise above $4.50 per gallon.
Since RBOB gasoline futures bottomed in December, Costco’s stock is up about 30%.
Is Costco Ready for a Pause?
The chart hints at a possible hurdle around $1100. A breakout above $1030 earlier set a $1100 target, based on a $70 range observed from February to early May. The RSI is strong, confirming the record price level, and volume is building in the low $1000s.
This looks like a classic “buy‑the‑dip” setup. Costco’s fiscal Q3 2026 earnings are due Thursday, May 28, with same‑store sales data following on June 3. A stock split could also be announced for this thousand‑dollar stock.
The Consumer May Not Be Cracking Yet
With solid charts for both Walmart and Costco, there is no immediate reason to worry about the consumer staples sector. While many smaller retail names stumble, the big players remain strong.
On a macro level, a better jobs market could lift consumer confidence. Households may need extra help as tax‑refund savings fade, and a possible 5% CPI reading looms.
Bottom Line
Consumer staples have become market leaders over the past month, outperforming large‑cap technology and energy stocks. Walmart and Costco drive the sector, each with upcoming earnings that could add extra volatility. Keep an eye on the XLP vs SPY ratio as June approaches, a historically tough month for the S&P 500.
Disclaimer: This article is for educational purposes only and does not constitute financial advice. Always consider your personal situation and consult a professional before acting.
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