NEW YORK (Reuters) - A batch of U.S. retail earnings reports in the coming week is set to shed more light on the economic fallout from the shifting tariff backdrop and test the stock market's sharp rebound.

Results from retailers including Target, Home Depot and Lowe's arrive as investors have become less worried that U.S. President Donald Trump's tariffs will send the economy into a recession, particularly following the recent U.S.-China trade truce between the world's two largest economies.

But a warning from Walmart on Thursday that the world's largest retailer will have to start raising prices due to the high tariffs is putting other retailers in the spotlight, as investors watch how they are reacting to a trade backdrop that remains in flux.

"Retailers are going to be incredibly important, especially after what happened with Walmart's announcement," said Matthew Maley, chief market strategist at Miller Tabak.

Maley said it was notable that Walmart's warning followed news of the U.S.-China truce, in which both sides are reducing their extra tariffs that had exceeded 100% for 90 days.

That Walmart is "still warning about the tariffs that will be put in place, even though they won't be some of the most severe ones that everybody was worried about, obviously that raises some concerns," Maley said.

The potential for tariffs to raise prices that could slow consumer spending or drive up inflation has worried investors, particularly since Trump's April 2 "Liberation Day" announcement of sweeping levies on imports.

The retailers' quarterly reports also will offer the latest glimpse into the health of consumer spending, which accounts for more than two-thirds of U.S. economic activity.

Data on Thursday showed U.S. retail sales growth slowed sharply in April as the boost from front-loading purchases ahead of tariffs faded, while consumer sentiment and other surveys have been weak.

"Sentiment is pretty sour," said Jack Ablin, founding partner and chief investment officer at Cresset Capital. "But what we have to do is find out if households are really following through and pulling back on spending."

Results in the coming week also include apparel maker Ralph Lauren and off-price retailer TJX Cos, with the various reports offering insight into a number of consumer segments, investors said.

One topic of interest is whether shoppers will "trade down" to less expensive items "because people are nervous about rising prices," said JJ Kinahan, CEO of IG North America and president of online broker Tastytrade.

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Stocks have staged a massive recovery since Trump's April 2 announcement set off extreme volatility and sent stocks plunging. The benchmark S&P 500 index is up over 18% from its April closing low and has erased its losses for the year.

The stock market "just continues to bounce back," Kinahan said.

(Reporting by Lewis Krauskopf; Editing by Richard Chang)

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