Stocks Spring Forward, With Trepidation

Analysts expect retail sales for February to rise 0.3% after a disappointing flat month in January. For now, most economists believe that strong income growth and a tight labor market underpin continued strength in consumer spending.

At the start of March, the Commerce Department reported that personal income and spending rose more than expected in January, remaining above 5% year over year. The strength suggested that the consumer's strong addition to fourth quarter growth strength might spill into 2007. Consumer spending comprises two thirds of U.S. GDP.

Meanwhile the M&A mania that gripped stock market bulls ahead of the tumble on Feb. 27 is less manic and less hyped by the bulls now. A hefty slew of deals failed to provide a strong rally Monday.

Schering-Plough(SGP Quote) agreed to buy a unit of Netherlands company Akzo Nobel for $14.5 billion. Schering-Plough gained 0.4% on the day.

UnitedHealth(UNH Quote) agreed to buy Sierra Health Services(SIE Quote) for $2.6 billion, sending Sierra shares up 15.8%.

Kohlberg Kravis Roberts emerged to announce a $7 billion offer for Dollar General(DG Quote), which gained 25.6%.

But the market's mood is no longer about pure, raw appetite for stocks. It's about waiting and watching for the right clues and the right moment to step back into the fray.