Traders seem desperate to spin every Federal Reserve pronouncement hawkishly, so everyone will be listening for clues about possible tapering of quantitative easing when two Fed presidents speak later on Tuesday.
St. Louis Fed President James Bullard plans to speak at 11:30 a.m. EDT from Frankfurt, and New York Fed President William Dudley, who is a dove like Fed Chairman Ben Bernanke, will speak at 1 p.m. EDT at the Japan Society in New York.
Other than that, markets are likely to be quiet ahead of Bernanke's testimony on Wednesday. There will be the usual questions: When will the Fed start to taper its bond purchases? What would prompt the Fed to increase its purchases? Are the past few jobs reports really a "substantial improvement" in conditions?
The main issue is whether Bernanke will take the bait and launch into a prolonged discourse around the precise conditions under which they would consider tapering. My guess is that he will not.
Here's what will likely happen: Since the trend is to spin everything hawkishly, any indication from Bernanke that he is pleased with the trajectory of job growth, while at the same time saying inflation is contained, will be seen as a sign that tapering is coming sooner rather than later.
Will this result in the long-awaited correction? Maybe, but bear in mind there has been anxiety over this for more than a week, and the markets have done nothing. The stock market continues to hold up—the KBW Bank Index even closed at a four-year high on Monday.
Here are other things affecting stocks Tuesday:
Surveying Tornado Damage
The Oklahoma tornado, while devastating to lives, homes and businesses, will likely not have a significant impact on insurance companies. The largest publicly traded companies with exposure appear to be Allstate, Travelers and Chubb, but all three appear to have only single-digit market shares for homeowners and commercial.
The last significant tornadoes occurred in 2011 when about $2.2 billion in insurance claims was paid in Missouri alone. Some reinsurers, including Zurich Insurance Group and Munich Re may also have some exposure.
Oklahoma is also crisscrossed with oil pipelines. One oil trader said: "Don't think there was meaningful transport damage to pipelines or critical infrastructure. The disruption will likely be human capital as oil workers' lives are disrupted. I haven't seen much damage to facilities—many companies got very lucky. I know that the storm came within a mile or so of several facilities around Moore (where Flotek's Teledrift business is located), but there was no damage. ... But the pictures of the storm are chilling. Halliburton is in Duncan (about 20 miles from the epicenter) but doesn't sound like they were damaged. There are a lot of oilfield service companies with offices right in the area. There have to be workers with houses destroyed, etc."
Retail Earnings Beats
It was decent day for retail earnings, with beats from AutoZone, Best Buy, Dick's Sporting Goods, Saks, Urban Outfitters and Home Depot. Home Depot stock is at an historic high after raising 2013 earnings per share guidance, while Saks shares stand at a 52-week high. But sales were below expectations from AutoZone, Best Buy, Dick's and Urban.
The big story is from Home Depot. The company's 4.3 percent rise in comparable store sales confirms that the housing/home improvement story is very much intact, along with a significant beat on revenue. Full-year same-store sales guidance was raised to 4 percent from 3 percent, while earnings per share guidance was raised almost 5 percent, with an increase in share repurchases.
Saks also had good earnings, but as I noted on Friday, the problem with retailers like department stores is that they are expensive, and many may not have a lot of room left in their stocks because they are at new highs. Most did pretty well in the recovery—they got margins back up, and many got most of their sales back. But if you're a department store like Saks, there are other aspects of the economy that will grow faster, including housing, autos and appliances.
_ By CNBC's Bob Pisani. Follow him on Twitter @BobPisani.