K-Shaped Economy Continues to Inform Consumer Behavior Despite S&P 500 High

The S&P 500 may have hit an all-time high this month, but that doesn't necessarily mean consumers are feeling good about the economy. Retail sales data released in July came in at $763.6 billion, down 0.6% from the previous month.

Walmart and Home Depot reported their earnings this week, both beating estimates and posting comp sales growth. However, their market reactions couldn't have been more different. Walmart's stock fell 9% despite a top- and bottom-line beat, while Home Depot's rose slightly after its report.

The K-shaped economy is still very much with us, as shown by the earnings results of these two bellwether companies. While consumers higher up the income ladder are trading down for essentials and groceries, equity-flush homeowners have plenty of capital to deploy for home improvement projects.