NEW YORK (
) -- Retailers are rallying along with the rest of the stock market -- regardless, investors might be wise to stay on the sidelines.
The S&P Retail Index is surging 4.8% to 464.72, as several companies posted double-digit gains.
, the biggest percentage gainer, is soaring 14.9% to $26.65 ahead of its first-quarter earnings report, which is scheduled to be released after the close.
"The next three weeks we will know the state of retail both domestically and internationally," says Brean Murray, Carret analyst Eric Beder.
And while investors pretty much know the first-quarter numbers within a few cents, they will be waiting to hear any color on the second quarter and remainder of the year.
earnings, which are also due out after the bell, will be especially revealing as to the state of retail in Europe. Analysts are looking for profit of $1.06 a share on revenue of $576.1 million.
All of this could have profound consequences for such names as
Abercrombie & Fitch
, which derive a large chunk of their business from Europe.
will report its first-quarter earnings on Wednesday,
( BBI) are out Thursday, and
is scheduled to release its report on Friday. All of which puts them in a precarious position.
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"Investors will show little forgiveness right now," Beder says. "Any weakness or negativity from retailers, and the stocks will come right back down."
Indeed, this is what happened last week when
came in softer than expected. Even when disregarding the sell-off in the entire market last Thursday, investors overreacted to April numbers, says Dorothy Lakner, analyst at Caris & Company.
For this reason, Majestic Research analyst Chandi Neubauer says she personally would remain on the sidelines for now. "Nothing fundamental to the retail market happened over the weekend," she says. "People appear to have more confidence in the broader economy now that the Greece deal appears to be hammered out."
-- Reported by Jeanine Poggi in New York.
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