The earnings focus shifts to the Retail sector this week as traditional brick-and-mortar retailers come out with quarterly results. Stocks of most of these traditional operators have done better than the broader markets this year, except for Wal-Mart (WMT) which reports before the market's open on Thursday and whose stock has been a notable laggard since the company's last earnings release back in mid-February. The company's recent big Indian purchase has failed to reverse the stock's underperformance, with the stock now down -14.8% in the year-to-date period.

In total, we have 125 companies on deck to come out with Q1 results, including 10 S&P 500 members. Macy's (M), Nordstrom (JWN), Wal-Mart and Home Depot (HD) are major retailers reporting results this week, with Cisco (CSCO) and Deere & Company (DE) as the other notable reports.

Macy's, Nordstrom and other department store stocks have been strong performers this year, with Macy's up +18.7% and Nordstrom up +3.5% in the year-to-date period, doing better than the S&P 500's +2.5% gain. Driving this recent momentum is the market's optimism about these companies' restructuring and competitive repositioning, with Macy's actively bringing down its physical footprint and investing in its digital platform. We will see if either Macy's or Nordstrom can sustain these gains after they come out with results in the next few days.  

The Zacks Retail sector is up +7% in the year-to-date period, doing better than the broader market. Helping the sector's recent outperformance is the aforementioned positive momentum in the stock prices of Macy's and other traditional retailers. But we should keep in mind that the Zacks Retail sector also includes online vendors like Amazon (AMZN) in addition to traditional brick-and-mortar operators.

You can clearly see this dynamic at play in the year-to-date chart below plotting Macy's (blue line) against the Zacks Retail sector (red line) and Amazon (green line).