The big number for markets Wednesday is April's existing home sales, which should tell the story of a weak spring selling season.
Traders are also watching the Treasury's auction of $35 billion in five-year notes and the movement of the dollar, which gained fractionally against the euro and yen Tuesday. FDIC Chair Sheila Bair holds a briefing on quarterly bank profits at 10 a.m.
Stocks Tuesday vaulted higher on a better-than-expected consumer confidence number of 54.9, up sharply from April's 40.8, and double February's 25.3.
From 'Fast Money':
The Dow finished up 2.3 percent at 8473, while the S&P 500 was up 2.6 percent at 910 and the Nasdaq was up 3.5 percent at 1750. Financial stocks were the big winner, up 4.1 percent, followed by consumer discretionary stocks, up 3.8 percent. Telecom and tech were next, both up more than 3.2 percent.
As stocks soared, selling hit the the Treasury market, pushing yields on the 10-year above 3.55 percent.
But traders say they didn't see a lot of real serious buyers for stocks in Tuesday's run up. "We're seeing some selling into the strength," said Pete McCorry of Keefe Bruyette.
"I think it's short covering and some of these high frequency guys, rather than real money buyers," said Art Cashin, director of floor operations for UBS.
Scott Redler, who follows the market's short term technical moves, said short sellers were set up ahead of the open, expecting a down market because of the North Korean missile launchand disappointing S&P Case Shiller home price data. But the consumer confidence number turned the tide, firing up a rally in stocks.
"A close above 910 to 912 (on the S&P 500) should make 929 an easy target," Redler said.
Tuesday's rally could be important. "It put the market back on track. A day like this shows what the next direction should be. At this point, it's scarier to be short than long," he said. Redler said the charts of some key stocks, like Research in Motion, Google, Apple and the semiconductors, look set to break out again.
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He said the approaching month end on Friday could push more buyers into stocks, as fund managers see gains that they may not have sufficiently participated in. "Traders are calling this market the "roach motel." They don't let the shorts out, and they don't let the longs in. You can't buy a big dip, and you can't short a breakdown. It's mini moves, as it stair steps higher," said Redler.
Cashin said it's yet to be seen whether the consolidation phase is finished. "This is very similar to the rally of Monday a week ago," he pointed out.
Citigroup chief U.S. stock strategist Tobias Levkovich, in a note Monday, warned investors that various indicators he watches for stocks no longer look as compelling after the market's big run up since March 9. He said the outlook remains constructive, but there could be a more moderate appreciation in the next several months.
Meanwhile, in the Treasury market, traders were surprised by the strength of the two-year auction, which helped support stocks in the afternoon.
"We had a really strong two-year auction in terms of customers participating. It was more aggressive than the market was," said Rick Klingman, managing director of Treasury trading at BNP Paribas. He said the next event after the $40 billion two-year auction is the five-year auction Wednesday. "I don't know if people are going to be happy to take on more supply when the market is trading so poorly," he said. Traders say the real test will be when the Treasury moves further out the curve, with the 7-year auction on Thursday.
Brian Bethune, IHS Global Insight chief U.S. economist, said he sees existing home sales dipping for the month of April, while other economists expect a small increase. "We're looking for 4.47 million, somewhat of a pull back from the 4.57 in the last month," he said. Foreclosure sales were a factor in those bigger March results, he said.
"We think last month's numbers were over distorted on the positive side. There were anomalies in certain markets that seem to show a jump in sales. The west in particular," he said.
Bethune said other data is not showing anything near the improvement the Tuesday confidence number suggests, and the next month's reading of consumer confidence in fact could in fact be lower.
"It was actually expectations that improved, not significant change in behavior in spending. That's the kind of mood we're in. Mind you, the mood of pessimism did hit a very rock bottom early in the year for a variety of reasons, so it bounced off those lows in terms of the attitudinal survey," he said. "... there's been nothing in terms of activity. The negative news in the background is still too powerful ... like the problems with Chrysler and GM and the plant closings."
"Right now, we don't see anything to say there's improvement in auto sales, home sales or chain store sales. Eventually, you have to have a tangible improvement in certain areas of the economy to validate the attitudinal improvement. That hasn't happened yet," he said.
Speaking of autos, General Motors bondholders' voteon the company's debt exchange offer was to end midnight Tuesday, and Chrysler is back in bankruptcy court on Wednesday on its sale to Fiat. CNBC's Phil Lebeau reports that Chrysler could be out of bankruptcy as early as next week.
The pickup in consumer confidence also helped oil prices Tuesday. After starting the day lower, oil finished up 1.3 percent to $62.45 per barrel. OPEC oil ministers will be gathering in Vienna Wednesday ahead of their Thursday meeting.
There are just a few earnings Wednesday, including Dollar Tree , Staples , AutoZone , Ralph Lauren Polo and American Eagle .
In other corporate news, Exxon Mobil holds its annual meeting at 10 a.m. in Dallas, and Amylin faces off with investor Carl Icahn who is trying to unseat directors in a proxy vote. Its annual meeting is at 1130 a.m.
The "D" conference, on all things digital, is underway in Carlsbad, Calif. Wednesday. Executives from top companies in digital technology and media are expected to attend.
At noon, Treasury Secretary Tim Geithner speaks to community leaders in Boston about the Boston area recipients of the New Markets Tax Credits, awarded under the Recovery Act.