Retail and Restaurant Stocks on Watch as Credit Conditions Tighten

Tighter credit conditions are expected to impact consumer borrowing costs following the Federal Reserve's interest rate hiking cycle. Several retail and restaurant stocks are being watched closely as a result.

KB Homes (KBH) will post its quarterly results on Tuesday, providing insight into how consumers are adapting to rising interest rates. General Mills (GIS), meanwhile, may report on the effects of increased energy and diesel prices on its input costs in the food sector.

In retail, Costco (COST) shares have been trending downward since peaking at around $1,100 in May. Darden Restaurants (DRI) also faces scrutiny after its stock dropped nearly 10% from its August high.

The risks are rising for a broader decline among restaurant stocks, with McDonald's (MCD) stock already experiencing a decline from $280 to $248.24 over the past month.