A groggy Wall Street will awaken from the long weekend Tuesday to an earnings release from

Wal-Mart

(WMT) - Get Report

, the nation's largest retailer, which analysts say could give strong clues as to the direction of consumer spending.

When the Bentonville, Ark.-based company releases its quarterly earnings before trading opens Tuesday, reviewing its actual performance is likely to be an afterthought for most investors. After all, Wal-Mart is one of the few retailers to provide weekly sales updates, and most analysts are confident the company will meet the consensus earnings estimate of 44 cents a share for the quarter. Instead, Wall Street will be focusing on what the company says in its conference call regarding the consumer spending outlook in 2001, much as recent earnings announcements by technology companies offered a dour view of the health of the manufacturing sector.

What Wal-Mart says will likely reverberate throughout the sector, and could send rivals' stocks tumbling should the company make any cautionary statements. This risk is worsened by the fact that retail stocks have rallied sharply in recent months, with many now considered relatively expensive. For example, while most analysts praise Wal-Mart's performance and management, they are not urging investors to load up on the stock, which trades at an expensive 37 times trailing earnings.

"What they say will weigh heavily on other broadline retailers," says

Robertson Stephens

analyst Bill Dreher. "They go into very extensive detail." Dreher has a long-term accumulate rating on Wal-Mart, and his firm doesn't have an investment banking relationship with the retail giant.

Dreher says Wal-Mart has the best systems among any retailer to predict spending in its outlets -- and its figures are widely viewed as a gauge of broader trends in consumer spending.

Indeed, among analysts and investors Wal-Mart's forecasts are viewed much the same way as the government's economic data that track consumer habits. "The company is representative, it's the bellwether," says Mark Miller, an analyst at

William Blair & Company

. "Just like what

Cisco

(CSCO) - Get Report

says affects all technology, what Wal-Mart says affects all retail." Miller has a long-term buy rating on Wal-Mart and his house does not have a banking relationship with the company.

Still, Miller expects the company to be conservative in its forecasts. "I don't expect them to say anything real bullish about the second half, although I think they believe that spending will rebound, as most economists do," he says. "It is unlikely they will say anything hugely exciting."

Wal-Mart's release will hit the newswires around 8 a.m., or shortly before, and then a recorded management call will be available for dial-in. Also Tuesday,

Home Depot

(HD) - Get Report

, which has already

warned that its earnings will be lower than previously expected, will release its quarterly report.

The spate of earnings releases for the nation's major retailers, which begin with Wal-Mart's, come amid a slowing economy and in the wake of one of the worst holiday seasons in recent memory for the nation's shopkeepers. Retailers recently released comparable-store sales figures for January, which measure sales in shops open at least a year and are a key metric for the retail industry. These showed that sales were not as bad as many expected, although much of the gains were due to markdowns of leftover holiday inventory.

Even amid all the gloom, analysts are largely bullish on the retail sector. In the five months since bottoming last August, the

S&P Retail Index

has jumped 29%. Analysts see a rosy future, mainly because the

Federal Reserve

last month slashed interest rates by a full percentage point. And the consensus among economists that consumer spending will rebound in the second half has also contributed to the recent optimism for retail stocks.

And if Wal-Mart's conference call Tuesday morning has a an upbeat tone to it, expect more rosy prognostications by the sector's analysts.

Wal-Mart closed Friday at $52.27, up 27 cents.