Yahoo Finance Live anchor Seana Smith highlights stocks like Target, which is among the retail names in the red after warning of soft holiday sales.

Video Transcript

SEANA SMITH: Rachelle, you mentioned the sector action that we're seeing play out. Another decliner here is consumer discretionary. A lot of that has to do with what we saw from Target this morning. Retail, a huge underperformer in today's market. And let's take a look at some of these movers in this space. You can still see Walmart holding onto gains, riding on the heels of that better than expected report that we got out yesterday morning. But Target, a totally different story.

You're looking at losses of just about 12 and 1/2%, the company saying that they are starting to see consumers pull back on spending. Of course, the big fear here is what this means for the holiday season. Maybe holiday sales will be even worse than we had initially expected. And taking a look at some of the names that is dragging down with it, a lot of red that you're seeing on your screen, Macy's being one of those names, that stock off just around 7 and 1/2%. Abercrombie and Fitch off nearly 8% as well as Kohl's, Foot Locker, and Gap a number of underperformers in today's real estate-- retail industry here.

But Rachelle, I also want to pull up-- point out some of the highlights. Because you can see Lowe's still up just about 3 and 1/2%, and very similar to what we heard from its rival, Home Depot, yesterday. Better than expected results there pushing that stock higher, up another 3% today. And once again, we're still seeing Home Depot hold onto its gains from yesterday, moving up another 1% today.

RACHELLE AKUFFO: And it really is a tale of two retailers as we take a look at that breakdown there on the heat map. You're seeing some of these more cost conscious stores like a Walmart, a TJ Maxx doing better, as we're seeing consumers start to pull back though and start to trade down in some of the brands that they're looking at. So some of these store brands like Walmart doing particularly well.

Interesting to see what we're seeing with Lowe's and Home Depot. Obviously, a lot of people sort of stuck in their houses at the moment because of the high mortgage rates. So perhaps now turning to see perhaps, I'll do a little more home improvement, wait for the market to get a bit better, and perhaps have a better chance at selling their homes. But an interesting dynamic that we're seeing among retailers, Seana.

SEANA SMITH: Yeah, Rachelle, you're exactly right there. And thanks for pointing that out. When it comes to Lowe's and Home Depot, a lot of that outperformance is being attributed to the slowdown that we're seeing in housing. People aren't as likely to go out and buy new homes. So instead, they're staying where they are. And they're spending that money on renovations. And we're seeing that reflected in the results that we got for their most recent quarter.

In terms of looking out to what we will get for the fourth quarter and then into 2023, I think a lot of the hesitation has to do with the pullback that we could potentially see in consumer spending over the next several months. We know that there is a looming recession. We've already seen people evident in Target's most recent report changing what they're spending their money on. That was also reflected in what we got from Walmart.

Walmart outperformed in large part due to people spending more money on the grocery side of that business. That's helping results. So certainly, we're seeing two different stories play out. And there will clearly be winners and losers in the retail sector this earnings season.