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Coronavirus, consumer confidence, Home Depot earnings: What to know in markets Tuesday

Investors are bracing for another wild day in markets on Tuesday. Wall Street suffered its worst losses in 2 years on Monday, as fears of a global coronavirus pandemic forced investors out of stocks and into safe-havens like the dollar, gold and Treasuries. All of the Dow’s (^DJI) gains for 2020 were evaporated amid the volatility, which is unlikely to abate after an eruption of new infections outside of China.

Investors will also eye the Conference Board’s February consumer confidence index on Tuesday. On the corporate earnings front, earnings results for Dow-component Home Depot (HD) will be in focus.

The Conference Board’s report is poised to provide a look at how consumers – the driving force of the domestic economic expansion – are weighing a strong U.S. economy and tight labor market against global concerns over the coronavirus outbreak.

Consensus economists expect the report will reflect a net positive increase in consumer confidence. The consumer confidence index likely rose to 132.0 in February, up slightly from 131.6 in January, according to Bloomberg consensus data. Such a result would mark the highest level since July and the fourth consecutive monthly increase in the index.

“The Conference Board’s consumer confidence index should remain elevated in February. Jobless claims remain low, and wages are slowly by steadily rising,” Wells Fargo Securities economists wrote in a note Friday. “Low gasoline prices, in the most simple of terms, mean more money in consumers’ pockets.

The Conference Board’s February report comes after the University of Michigan’s own closely watched sentiment index rose 1.1 points in February, according to the institution’s first print out earlier this month. While the two measures of consumer sentiment do not necessarily move in perfect lockstep, their trajectories tend to be similar.

The University of Michigan’s final revision for its February sentiment survey is due out Friday, with consensus economists expecting the index to be downwardly revised slightly to 100.7 from 100.9.

At the time the first print was released earlier this month, the coronavirus was mentioned by just 7% of those surveyed when asked to explain their economic expectations, according to Richard Curtin, the University of Michigan’s Surveys of Consumers chief economist.

“While the virus presents a risk, we do not expect it to meaningfully weigh on confidence in February,” the Wells Fargo economists concurred in their report.

August 12, 2019 Sunnyvale / CA / USA - People shopping at The Home Depot in South San Francisco bay area

Home Depot earnings

Separately, fiscal fourth-quarter earnings results from home improvement giant Home Depot are due for release Tuesday morning.

Consensus analysts expect the Dow component will post adjusted earnings of $2.11 per share on revenue of $25.75 billion. Closely watched same-store sales are expected to rise 5%, accelerating from the 3.6% pace from the third quarter.

For the last quarter of the year, Home Depot is expected to have seen less of a negative impact from lumber price deflation, which weighed on the company’s top line for much of last year. It also has the benefit of a strengthening housing market, with low interest rates and warmer than average weather in December and January helping drive a near 18% jump in new-home building in December, followed by a 9.2% jump in building permits in January.

At the same time, however, a shorter holiday shopping season in 2019 has weighed on a number of retailers that have already reported results. And Home Depot last quarter called out a negative impact due to shrink, or the loss of inventory due to theft, damage and other issues.

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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