(By Rich Bieglmeier) The yo-yo went on the upswing Tuesday. For what, iStock is not sure. Perhaps, Wall Street will swing from worried to hopeful on alternating days, up on hope, down on worry - sort of a 2012 stock market version of the 1974 gas lines.
Volume did tick up Tuesday as the indexes tacked on more than 1%; although, the pace of trading is still iron deficient. The minor gains put the Dow and S&P up against their respective 26-day averages, while the NASDAQ has a bit more work to do before catching up.
Stocks will have a chance to rise if Wednesday's Retail Sales report reveals that consumers spent more than polled economists predict. The street is expecting a headline number of -0.2%, strip out autos and gas, and the number is expected to rise to a gain on 0.4%.
According to RetailSails.com, "Following a tepid April showing, shoppers shrugged off increasing anxiety about economic and job market weakness last month, spending at a healthy clip on spring apparel, Mother's Day and graduation gifts."
"Strength was broad-based, with 17 of the 19 chains reporting comp gains and 69% beating analyst estimates." The only retail chains to report lower comps were Wet Seal Inc. (WTSLA) (-8.8%) and Kohl's Corp. (KSS) (-4.2%).
iStock expects the non-auto column to at least hit the target of 0.4%, perhaps come in a little better than expected. However, May might be the best of it for a while. Some economists expect consumers to tighten up before the back-to-school shopping season as worries persist over job security.
As for cars, Siriusbuzz.com reports "The SAAR (Seasonally Adjusted Annual Rate) in April dropped from above 14 million in earlier months this year to 13.8 million in May. Despite auto sales in May being above 1,330,000, they were shy of the nearly 1.4 million the street was expecting. Year over year numbers look great, but it is the expectations of the here and now that define the sentiment."
In iStock's review of sector charts, Auto have been flashing signs of under performance for at least a month. Wall Street is certainly acting as if car and truck sales could disappoint, pulling the headline number to target if retailers provide a bump.
Investors will get a better forward view of what to expect from consumers on Thursday and Friday as comfort and confidence survey results are released. If, as economist worry, the laboring labor market puts the fear of joblessness into consumers, Wednesday's retail numbers will have a one to two day expiration date.
iStock believes Retail Sales and the consumer reports will have to pull of an inside straight to power the markets towards their 50-day averages; although, there is one subtle thing working to the advantage of economic reports that didn't exist a few months ago. Right now, everybody expects lukewarm to negative news on the economy, up is the only direction where true surprises lie.