Tomorrow’s consumer sentiment readings could drive stocks either way. One technician isn’t convinced the bear is dead. Philly Fed fans fears.




It’s all about the economy. Stocks gained early in the day after some upbeat data hit the wires, then sank after an afternoon dose of downbeat revelations, and finally closing with a tidy gain as investors digested the whole lot of figures.New features.


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Tomorrow brings more key data, this time in the form of consumer sentiment readings.




The corporate front, still breathing hard after racing to meet the CEO certification deadline regarding financial disclosures, produced some juice for buyers today. In particular, retailers came to life, with Target (TGT, news, msgs) stock rising after the store chain said earnings jumped 26%. And Brocade Communications Systems (BRCD, news, msgs) jumped some 6% after the company reported a 52% rise in quarterly profit and said businesses are buying its products despite the slow economy.




Meantime, BEA Systems (BEAS, news, msgs) rose 10% after posting profits that met expectations. BEA said it sees revenues flat or rising in the current quarter as business begins to turn around.




Such talk was highly refreshing, to say the least, especially in light of the airline-bankruptcy buzz. After the bell yesterday, United Airlines parent UAL Corp. (UAL, news, msgs) announced it was preparing to file bankruptcy in the fall unless it could slash costs and win wage concessions from workers. But its stock actually climbed a bit today.




Philly Fed feeds fears




The market was rolling merrily along until this afternoon when the Philadelphia Federal Reserve put out its monthly survey of business activity, a closely watched barometer of future factory output.




The problem: August brought the survey’s first decline of the year. A variety of readings within the survey turned negative: new orders, shipments and backlogs of unfilled orders, for instance, all dropped.




Peering even deeper into the data reveals additional worries. To be sure, many manufacturers (about 46% of those surveyed) expect growth over the next six months, while just 6% that expect declines. And yet, expectations of future employment are quite pessimistic. More employers (18%) expect to reduce workforce than add to it (17%). A future-employment index, meantime, fell to its lowest level in a year.




Other economic reports out today weren’t quite as dire. For instance, the Federal Reserve said total U.S. industrial output -- manufacturing, mining and utilities -- unexpectedly bumped up in July, by 0.2%. That's down from 0.7% in June, and most of the difference can be attributed to auto manufacturing (funny what no-interest financing will do for an industry.) Meanwhile, the Labor Dept. reported that new jobless claims rose last week, but by just 6,000 to 388,000.




Consumer is king




In the midst of this shaky recovery, there’s nothing much is more important than consumer spending, which represents some two-thirds of the economy. With corporate spending still virtually moribund, economists will be closely watching tomorrow’s economic data for clues about the direction of consumer sentiment (and thus, spending).




The University of Michigan’s consumer sentiment reading hits the presses Friday morning. And as CNBC’s Bob Pisani noted, it was last month’s Michigan report that kicked off a spate of bad economic news that helped drive stocks down.




For the full slate of economic data coming out in the days ahead, click here.




Can S&P 944 be breached?




Investors are paying an inordinate amount of attention to technical indicators these days as they try to deduce whether the market’s bottom has been struck.




One widely followed technician, Philip Erlanger, who has made several accurate calls about market direction in recent months, remains skeptical. In his mathematical analysis of volatility readings and many other statistics, Erlanger terms as “unlikely” the notion that a new bull market has been created.




Intriguingly, he writes in an Aug. 15 update to clients, “The market's intermediate advance has taken it close to a precise test of resistance.” That test sits at 944 for the S&P, which was the intraday low for that index last September. If the S&P can bust through that level and keep on rising, we may well be seeing the launch of a new bull market.




And yet, about that scenario, Erlanger writes, “Anything is possible, but the overhead supply suggests otherwise.” Overall, Erlanger sees an uptrend in the short and intermediate terms -- but those trends sit within a long-term downtrend that has yet to be broken by his estimation.




-- CNBC on MSN Money staff


http://moneycentral.msn.com/content/CNBCTV/Articles/Dispatches/P28614.asp