Market Preview: The Rally Returns - TheStreet

Updated from 8:01 p.m. to add information about Lennar's quarterly report and the after-hours session.



) -- There's nothing like the chairman of the

Federal Reserve

painting a dour picture

of the U.S. employment situation to get 2012's relentless stock rally back on track.

Ben Bernanke rekindled investor hopes that another round of quantitative easing could be in the offing, and suddenly last week's worries about a hard landing in China and rising Spanish bond yields were out the window.

Ian Shepherdson, chief U.S. economist at

High Frequency Economics

, isn't buying the idea that QE3 is back on though, mainly because it's not only up to Big Ben. He sees a fair amount of resistance within the Federal Open Market Committee, specifically Dennis Lockhart and Jeff Lacker, and feels it would be no picnic for Bernanke to get QE3 approved.

"We remain of the view that Mr. Bernanke could push through more QE now only after a titanic struggle, and that the recent stronger data mean it is effectively off the agenda for now," Shepherdson said. "If our macro view proves correct and the recovery in bank lending broadens and deepens, the labor market and GDP numbers will keep the Fed on the sidelines indefinitely, and its next action will be to start reducing the degree of accommodation rather than easing still further."


S&P Capital IQ

was out with some historical data on Monday that would seem to bode well for stocks from here. It turns out, a double-digit percentage gain for the

S&P 500

in the first quarter leads to further appreciation more times than not.

"Since 1945, in the eight times that the '500' was up 10% or more in Q1, it gained another 3.3%, on average, in Q2 and rose in price six times, or 75% of the time," wrote Sam Stovall, chief equity strategist. "In the 10 times that the market was up 5% or more in Q1 and Q4 of the prior year, it was up an average 4.0% in Q2 and rose in price an average 60% of the time."

April is historically a very good month for the stock market with the S&P 500 up an average 1.57% since 1945, making it the second-best performing month of the year behind December, Stovall said. The outlook for the full year favors more gains as well.

"Additionally intriguing is that in these 10 years that had strong Q4 and Q1 performances, eight saw their YTD low points in January and all 10 recorded an average full-year advance of 22%, rising 90% of the time (2011 was flat)," Stovall wrote. "Only twice did the market trough with a YTD decline much later in the year: 1971 (November) and 2011 (October). So history says, but does not guarantee, that those investors still on the sidelines looking for a correction may find that when it finally comes, it will likely occur from such a high level that the S&P 500 does not dip below its prior year close, as it has in 90% of the years since 1945."

As for Tuesday's scheduled news,

PVH Corp.

(PVH) - Get Report

is reporting its fiscal fourth-quarter results after the closing bell, and the average estimate of analysts polled by

Thomson Reuters

is for a profit of $1.10 a share on revenue of $1.5 billion.

Shares of the clothing company, whose brands include Calvin Klein, Tommy Hilfiger and Izod, hit a new 52-week high of $91.92 ahead of the report. Based on Monday's regular-session close at $90.83, the stock is up nearly 8% so far in 2012 and 49% in the past year. The company has a pretty strong earnings track record, beating Wall Street's consensus view in the past eight straight quarters with average upside surprise of 11.5%.

The sell side is very bullish with 12 of the 16 analysts covering the stock at either strong buy (6) or buy (6) and the median 12-month price target at $95. Brean Murray previewed the report on Monday, reiterating its buy rating and lifting its earnings estimate to $1.10 a share from $1.08. The firm also boosted its price target to $105 from $85, saying "

We continue to view PVH as one of the dominant, must own names in the apparel sector."

Brean Murray also said it's "highly confident" in its revised earnings estimate and that it's expecting PVH to have made more progress in paying down debt related to the Tommy Hilfiger deal, calling this the "balance sheet order of the day."

Check out TheStreet's quote page for PVH Corp. for year-to-date share performance, analyst ratings, earnings estimates and much more.



(LEN) - Get Report

shares have surged more than 30% so far in 2012 as investors warmed to the home builders with the housing market showing signs of stabilizing, if not quite improving. The company is due to report its fiscal first-quarter results before the opening bell, and Wall Street expects a profit of 4 cents a share on revenue of $699.4 million.

Sell-side sentiment is still skewed to the negative on Lennar shares though with 15 of the 27 analysts covering the stock at either hold (14) or underperform (1), and the 12-month median price target at $26 vs. Monday's close at $26.40. FBN Research is the biggest bear on the stock with the underperform rating and it's expecting a below-consensus adjusted profit of 3 cents a share from Lennar in the quarter on revenue of $680.3 million. The firm thinks the stock is too rich at current levels.

"LEN trades at 1.64x Adjusted Book (using 75% value for Tax Valuation and J.V. Equity) and 22.2x our fiscal 2013 EPS estimate," FBN said in a research report previewing the first-quarter results on March 21 when the stock closed at $26.62. "We believe a price/book multiple of1.2x and 15.0x 2013 earnings is a fair valuation indicating a target of $18.50. LEN ranks 12 of 13 in our Homebuilder Model and would be a seller of shares."

Check out TheStreet's quote page for Lennar for year-to-date share performance, analyst ratings, earnings estimates and much more.

Other early reporters on Tuesday will include

Charming Shoppes

(CHRS) - Get Report


McCormick & Co.

(MKC) - Get Report

, and




The late roster features

Christopher & Banks

(CBK) - Get Report



(EXFO) - Get Report

, and

Sealy Corp.



Another stock that could be active on Tuesday is

American International Group

(AIG) - Get Report

after CEO Robert Benmosche said in an

appearance on CNBC

that he expects taxpayers to realize a profit of $5 billion to $10 billion on their bailout investment in the insurance giant.

The shares jumped nearly 3% on Monday to close at $29.06 amid the broad market rally, and it's gained roughly 22% year-to-date. Deutsche Bank lifted its price target on AIG to $40 from $35 on Monday, saying it expects the company to ramp up repurchase activity.

"We believe that AIG is likely to buy back far more of its own shares than the market price would indicate and we believe those share buybacks happen at a pace that is far faster than currently anticipated," said the firm, which has a buy rating on the stock. "We believe $15-20 billion (or even more) worth of buybacks over the next twelve months is achievable as the Treasury and AIG sell off the remaining non-core assets. We believe BVPS

book value per share growth in excess of 30% is possible if shares continue to hover around their current price."

Tuesday's economic calendar features Redbook weekly chain-store sales at 9 a.m. ET, the Case-Shiller 20-city home price index for January at 9 a.m. ET, and consumer confidence for March at 10 a.m. ET.

The consensus is calling for the confidence gauge to tick down to 70.1 from 70.8 in Feburary; although

is expecting a surprise increase to 71.

And finally,

Apollo Group


had a volatile

after-hours session

after reporting an above-consensus profit in its fiscal second quarter.

The for-profit education company, which operates the University of Phoenix, beat Wall Street's view by more than 50%, delivering earnings of 58 cents a share vs. the estimate of 37 cents, but the stock was unable to hold gains in the extended session. It ranged from as high as $47.06 in late trades, but was last quoted at $41.50, down 4%, on volume of more than 600,000, according to



Written by Michael Baron in New York.

>To contact the writer of this article, click here:

Michael Baron


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