Skip to main content

NEW YORK (

TheStreet

) -- 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

Wal-Mart

(WMT) - Get Walmart Inc. Report

looking strong when it reported second-quarter earnings last week while more upscale retailers like

Nordstrom

(JWN) - Get Nordstrom, Inc. Report

and

Abercrombie & Fitch (ANF) - Get Abercrombie & Fitch Co. Class A Report

(ANF) - Get Abercrombie & Fitch Co. Class A Report

continued to suffer.

TheStreet Recommends

We'll see whether Wal-Mart is an anomaly when

Target

(TGT) - Get Target Corporation Report

and

Sears

(SHLD)

post results this week.

Home Depot's

(HD) - Get Home Depot, Inc. Report

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

TheStreet.com

. Previously, he served as deputy editor and chief innovation officer at

The Orange County Register

and as a news manager at

Bloomberg News

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

The Journal-Gazette

in Fort Wayne, Ind. His work also has been published in a variety of newspapers including

The Wall Street Journal

,

The New York Times

and

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.