October's retail sales on Wednesday will provide one of the first looks at how super storm Sandy impacted the economy.
The storm, which hit the East Coast and ripped into the New Jersey and New York coast lines on Oct. 29, is expected to ultimately have a small impact on U.S. gross domestic product, but will create a lot of murky data for the rest of the year.
(Read More: Sandy's Economic Impact on Shopping)
"Clearly, the hurricane is playing a pretty big role here," said Stephen Stanley, chief U.S. economist at Pierpont Securities. "We saw a pretty big drop in auto sales from the carmakers, and there will be a certain amount of loss of sales in the last few days of the month because of the hurricane. We don't get a good read on activity from these numbers."
Stanley expects to see a decline of 0.3 percent in October sales, but a gain of 0.1 percent if autos are not counted. He said there could have been additional purchases of groceries and building materials ahead of the storm, but that could be offset by a lack of activity afterwards.
"On balance, I still think it will be a negative influence, because there were so many people without power and they couldn't get around. Presumably there will be a positive influence down the road, maybe starting as soon as November, as people have to buy stuff that was destroyed. Cars are a good example," Stanley said.
Moody's Economy.com Chief Economist Mark Zandi said Sandy's hit on retail sales could continue in November and comes before what promises to be a lackluster holiday shopping season, without a big surge in hiring.
(Read More: Sandy Among Worst-Ever Economic Disasters: Zandi)
"I don't think retailers are letting loose. They're still pretty cautious. I don't think it's going to be a great Christmas. I think it's going to be an okay Christmas. November sales are going to be weaker because of Sandy. There will also be a lack of restaurant sales," he said. "People focused on home improvement, trying to get the house in order. I think we'll see some weaker numbers in November." "We're going into the holiday season with core retail sales growth of three or four percent and that's probably what holiday sales growth will be this year."
For some retailers, Sandy will be a positive. Home Depot, which reported better-than-expected earnings Tuesday, said Sandy will have a positive impact on sales, comparable to the aftermath of Hurricane Irene last year as consumers rebuild.
Home Depot also made positive comments about the recovery in housing activity, noting even the hardest hit areas are mending. The report helped spur an early rally which later faded.
The Dow Jones Industrial Average ended Tuesday down 58 at 12,756, and the S&P 500 was off 5 at 1,374. The 10-year yield remained under pressure, falling below 1.6 percent. Besides the retail sales data, there is also PPI inflation data at 8:30 a.m. ET. Business inventories are reported at 10 a.m. and the minutes of the last Fed meeting are released at 2 p.m.
Zandi said he does not expect the U.S. Federal Reserve to reveal much new in the minutes of its October meeting, but he will be watching for any discussion of what the Fed plans to do with its Operation Twist, which expires at the end of the year.
(Read More: Sandy an 'Enormous Hit' to Economy: Ex-Fed Official)
Twist is an asset purchase program, under which the Fed buys longer dated Treasurys and sells the same amount of shorter dated notes. That is different from its open-ended QE3 program, where the Fed purchases $40 billion in mortgage-backed securities each month, expanding its balance sheet in the process.
He said it is likely the Fed will continue the asset purchases, but end the sales of shorter-dated notes when the program expires. However, he expects the Fed to end Treasury purchases and put all its fire power into the mortgage market, buying about $85 billion mortgage-backed securities a month.
Stanley also expects the Fed to morph Twist into its latest quantitative easing program, but he expects it to continue buying Treasurys, without selling shorter-dated notes. He doesn't expect to see much new in the minutes, and there may not be anything on Twist or the Fed's discussions about changing its communications strategy on interest rates.
"This meeting was literally right before the election. My guess was they were trying to get in and out of town without generating headlines. I don't know if it would come up," he said.
President Barack Obama holds a press briefing at 1:30 p.m. ET. After that, he meets with a group of CEOs from such companies as American Express, General Electric, Wal-Mart Stores, Proctor & Gamble, Ford Motor, and PepsiCo to discuss the "fiscal cliff" ahead of his meeting Friday with Congressional leaders.
The cliff is the $607 billion hit on the economy that would come starting Jan. 1 if Congress fails to act on expiring tax cuts and automatic spending cuts.
Moody's Zandi said if the full force of the cliff is felt, he would expect to see a decline in GDP of 3.5 percent in the first quarter on an annualized basis, and about a one percent decline in the second quarter, before the economy returns to growth in the third quarter.
If Congress makes spending cuts and raises some taxes, growth in the first quarter could be about 2 percent, he said. If the current tax situation remained and Congress did nothing, growth could be about 3.5 percent.
(Read More: Who Ultimately Wins From the 'Fiscal Cliff'? )
The Congressional Budget Office estimates growth for the year would be cut by a half percent if the economy hits the cliff, and it sees two negative quarters before a rebound in the second half. It also expects unemployment would rise to 9.1 percent.
—By CNBC's Patti Domm; Follow Her on Twitter @pattidomm
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