Whether consumers are willing to open their wallets is a big theme for Tuesday's markets.
First, Wal-mart's quarterly earnings will be reported in the wee hours of Tuesday morning. The biggest U.S. retailer is expected to have earned $0.75 per share, a gain of 11 percent, on revenues of $93.2 billion, an 8 percent increase. Its forward looking comments will be very important.
Then April's retail sales are reported at 8:30 a.m. and are expected to show a decrease of 0.2 percent.
But Tony Crescenzi of Miller Tabak says there's another, fresher number investors may want to watch for signs of whether the consumer is spending. He said the International Council for Shopping Centers issues a weekly number for chain store sales that should give clues as to whether consumers are spending their stimulus checks.
Data for the week ended May 3 showed a real change in trend, with an increase of 2.3 percent, he said. Last week's number "did match the highs of the year - the week of February 26 and January 1. I think it's part of the optimism in the markets. It's certainly looking better than mid January," he said.
"It's a reasonable expectation to see it move into the 3s," he said.
Certainly some of that optimism about the consumer spilled into Monday's market. Consumer discretionary stocks were the best performing S&P sector, with a gain of 2.08 percent, followed by materials, which were up 1.88 percent.
Crescenzi said the ICSC weekly data closely tracks ISM, and if there's improving manufacturing data this week from the Philly Fed and Empire State manufacturing index, it may create more optimism. "I think it's going to make people feel better for a little while. Whether it lasts, we'll have to wait and see," he said.
There's even a chance some of the stimulus-related spending could show up in April's retail sales though the number is not expected to be good. Crescenzi said people sometimes "lend" themselves money in anticipation of a check and many may have used credit cards to make purchases ahead of receiving checks.
The boost in retail spending from the $100 million stimulus program could pump some more hope into the market. "It makes for a pretty decent story and part of the reason why we're seeing rallies back. The Vix is at a multi-month low. It's a much calmer environment," said Crescenzi.
Also big tomorrow is the speech from Fed Chairman Ben Bernanke, who speaks to Federal Reserve Bank of Atlanta financial markets conference in Sea Island, Ga.
Bernanke's topic is Federal Reserve liquidity measures and he speaks at 8:20 a.m. via satellite. Other Fed officials also are speaking at the conference.
Monday closed with word of a potential new merger between Hewlett-Packard and EDS. HP stock slumped but the idea of a big strategic merger could be a boost for other tech stocks in Tuesday's market.
On Monday, the Dow jumped 130, or 1 percent to 12,876, and the Nasdaq was up 42 or 1.8 percent, while the S&P climbed 15 or 1.1 percent to 1403.
The dollar fell 0.35 percent against the euro, after a day of up and down trading. The dollar was up 0.95 percent against the yen.
The 10-year fell, raising its yield to 3.775 percent, and the two-year also sold off, lifting its yield to 2.288 percent.
Gold slipped $0.80 to $883.70 per troy ounce.
Oil lost $1.73 per barrel, or 1.4 percent, falling to $124.23 per barrel. Gasoline fell 1.2 percent to $3.1642 per gallon on the NYMEX. But at the pump, the EIA says U.S. retail gasoline rose $0.109 to $3.722 per gallon.
There's been increased optimism that the dollar may be ready to bounce. I asked Boris Schlossberg about this as he visited CNBC Monday.
"The fact we are seeing everyone on the same trend, to be dollar bullish so early tells me that maybe it's not the be last gasp of the dollar bears," said Schlossberg, senior currency trader at DailyFx.com.
The move in the dollar after it hit a low of $1.6018 per euro two weeks ago has been "tepid." The more I thought about it, that price action suggests we might have another vicious runup in the euro before it's over," he said. Schlossberg noted the U.S. economy has felt the impact of credit crunch but not necessarily recession and that could come.