Macy's and Wendy's report earnings before the bell Wednesday, on the heels of Disney's first earnings miss in five years.
There are few catalysts Wednesday for stocks, which bounded higher Tuesday, with energy, industrials and materials leading the market higher. The was up 1.2 percent to 2,085, while the Dow jumped 1.3 percent to 17,928. The Nasdaq was also up 1.3 percent at 4,809.
Disney shares slumped more than 5 percent in after-hours trading Tuesday, and the Dow component could weigh on the industrial average in early Wednesday trading.
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"Most earnings have come and gone, and they were bleh. I don't see a lot of juicy news stories" to propel the market, said Steve Massocca of Wedbush Securities. "The market was getting a little on the oversold side. It's only natural to see this kind of move." Massocca said he does not expect the market to do much, given that it's fully valued, and while he says there could be a correction in the offing, the situation is not headed toward a bear market.
"I think what's notable to me is you're really seeing signs that momentum stocks are regaining their leadership," said Ari Wald, technical analyst at Oppenheimer. "They took a back seat through the first quarter of the year, and now we're seeing some signs of returning leadership, which is very encouraging."
Wald pointed to MTUM, the iShares MSCI USA Momentum Factor ETF, which was up 1.3 percent and edging close to its highs though other momentum ETFs are not doing as well. SOCL, the Global X Social Media Index ETF, has not regained its first-quarter highs. The MTUM ETF contains Facebook, Amazon, Home Depot, Alphabet and others. Amazon.com was up more than 3 percent Tuesday after Bernstein put a $100 price target on its stock, which ended the day at $703.07.
Brick-and-mortar retailers, however, were not faring as well. Gap slumped more than 11 percent after the company warned on earnings. Macy's stock was down 2 percent Tuesday, ahead of its earnings report. Analysts expect to see a decline in earnings operating income, revenue and comparable sales. FactSet reports earnings expectations of $0.36 per share on revenue of $5.93 billion.
Wald said he sees sentiment as still too downbeat on the market and he expects the S&P to head to new highs.
West Texas Intermediate crude futures were up 2.8 percent at $44.66 per barrel Tuesday, but it turned negative in late trading after inventory data. American Petroleum Institute data, after the market close, showed an increase of 3.4 million barrels in oil inventories last week. Government inventory data is expected at 10:30 a.m. EDT Tuesday and is expected to show a much smaller build.
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Traders in the bond market Wednesday will be eyeing the $23 billion 10-year auction, set for 1 p.m.
Tuesday's $24 billion three-year note auction saw strong demand. "Pricing was more rich to the market than at any time in seven years," said Tom Simons, chief money market economist at Jefferies.
"It suggests the attitude about another Fed hike this year is extremely low," he said.
The 10-year issue should meet decent demand, he said. The 10-year was yielding 1.75 percent late Tuesday afternoon, a key psychological level. "Friday right before the employment data came out, 1.75 was a selling target. But they were buying them back at 1.70 after the report," said Simons. The April employment report was a major disappointment at 160,000 nonfarm payrolls, 40,000 less than expected.
Traders are also watching corporate issuance Wednesday. On Tuesday, there was $8.275 billion in corporate issuance, after nearly $25 billion Monday, according to Informa Global Markets.
Besides Macy's and Wendy's, earnings are expected from Toyota and Allianz before the bell. After the bell, Eldorado Gold, NetEase, Jack in the Box and Sina report. The federal budget is released at 2 p.m.
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