NEW YORK (
) -- The market wants to grow again. We've seen that in recent trading patterns. We've also seen what happens when investor enthusiasm outpaces consumer confidence.
Friday's drop in the markets may only have been a warning, precipitated by the weak July retail sales report and the drop in the Reuters/University of Michigan consumer sentiment index.
Those two reports provided a sharp reminder of how important the consumer is to any recovery.
This recession isn't over yet. Inevitably, there will be signs of a recovery long before one actually takes root. Past recessions have shown that we can see isolated gains in quarterly gross domestic product and a subsequent and swift return to negative territory.
This week, retailers will provide the reality check. Already we are seeing mixed messages, with
looking strong when it reported second-quarter earnings last week while more upscale retailers like
continued to suffer.
We'll see whether Wal-Mart is an anomaly when
post results this week.
results are coming too, and those may show that all this talk about a housing market rebound need to be tempered.
I'm not saying it's all doom and gloom out there. I tend to see the glass half full rather than half empty. I'm just cautioning that investors need to stay in tune with consumers.
There is still too much volatility in the market, with more massive single-day pops and big drops this year than we've seen for a long, long time.
Until market sentiment and consumer sentiment sync up, we'll keep seeing those dangerous swings in stocks.
Be careful out there.
--Written by Glenn Hall in New York.
Glenn Hall is the New York-based Editor in Chief of
. Previously, he served as deputy editor and chief innovation officer at
The Orange County Register
and as a news manager at
in Frankfurt, Amsterdam and Washington, D.C. As a reporter, he covered business and financial markets, worked in both print and television in the U.S. and Europe, and conducted in-depth investigative coverage at
in Fort Wayne, Ind. His work also has been published in a variety of newspapers including
The Wall Street Journal
The New York Times
International Herald Tribune
. Hall received a bachelor's degree in journalism and political science from The Ohio State University and a certificate in project and program management from Boston University.