Consumer confidence number could help to calm roiled markets

U.S. stocks were on course to open sharply lower Tuesday after North Korea fired a ballistic missile that flew over the northern tip of Japan.

But a rise in consumer confidence could help to calm roiled markets.

The Conference Board publishes its monthly Consumer Confidence Index reading Tuesday shortly after the market opens, and some strategists are expecting to see a pickup after a slight decline.

The index, which has touched all-time highs this year, is of particular concern to Erin Gibbs, portfolio manager at S&P Global. She will be watching for a sign that confidence has risen month over month. Some recent economic data has proven strong, and consumers seem more positive overall.

"This is important because it gives us an indication of what households feel about their economic situation, as well as how much they're going to spend in the future," Gibbs said Monday on CNBC's "Trading Nation."

In addition to the index's headline number, Gibbs is also cognizant of its relationship to the S&P 500.

"While this is not necessarily a predictor of future market returns, it does have a high correlation to the S&P 500 index. Since it is a reflection of households view of their economic condition and future spending, versus corporate views, it portrays what the US consumer feels about their future spending patterns," she wrote Monday in an email to CNBC.

As long as the Consumer Confidence Index does not see a "significant" drop for the month of August, Gibbs would expect to see stocks continue rising.

According to FactSet estimates, economists are largely forecasting a reading of 120, a slight decline from last month's reading of 121.1.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

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