Earnings Ahead, Records in Sight

But expectations are so low for the housing sector that much of the bad news is priced in, says Bollinger.

The housing sector overall fared poorly Tuesday as the International Monetary Fund dampened hopes for recovery. The IMF expressed concern in its semiannual Global Financial Stability Report that the subprime mortgage problems may spill over into the broader economy. The Philadelphia Housing Sector Index fell 0.5% Tuesday.

Once again, it was energy and cyclically sensitive stocks holding up the indices Tuesday. Oil prices gained 0.6% and natural gas gained over 4% on the day. El Paso(EP Quote) added 4.2% and Chevron(CVX Quote) marked a new all-time closing high, up 2.1% on the day.

In the Treasury market, where worry never fades, investors turned their attention to inflation as two Fed officials spoke hawkish words Tuesday -- a day ahead of the FOMC minutes. The 10-year Treasury bond ended the day up a meager 5/32 to yield 4.72%.

"We're going to be especially vigilant on the inflation front," Dallas Fed President Richard Fisher said in a speech in Texas. "I'm among those that believe we have more to do."

In a speech in Bridgewater, Va., Fed Governor Frederic Mishkin said "the inflation rate is higher than what I would like to see." But Mishkin supported the notion that the Fed may sacrifice slightly higher inflation to ensure solid economic growth. "While restoring price stability remains critical, the central bank should do so at a pace that does not do undue harm to the economy," he said.