SAN FRANCISCO -- Is the stock market beginning to revert to yet another Wall Street/Main Street dichotomy? On Tuesday, stocks kept their upward bias intact, despite the lack of any significantly positive economic or corporate news -- or any real indication that most investors are embracing more risk. Momentum continues to be the order of the day, so much so that the S&P 500 is now down only 14% this year. At 778, a touching of 800 seems less challenging than it did at this time last week. The continuing rebound in financial stocks continue to buoy the broader market. The Financial Select Sector SPDR ( XLF) exchange-traded fund, which jumped 31% last week, finished 6.5% higher, while financial-giant-cum-daytrading favorite Citigroup ( C) rose 8.6%, trading 626 million shares. Tuesday's market began an awful lot like Monday's -- a run-up with about two hours to spare, then the fork in the road to see whether we chalked another mark under "up day" or down day." Yesterday, stocks zigged, today they zagged. However, the two-day pattern does suggest that the will of investors to take the market higher can't necessarily be counted on to do a lot more than it just has. It was, after all, the mini-surges in stocks in both late January and early February that presaged the markets plunge to 2009 lows hit just 11 days ago. And measures of market breadth that indicate investors' willingness to embrace the entire market haven't been consistently strong. New lows on the New York Stock Exchange outnumbered new highs by 8 to 1, while the percentage of NYSE stocks trading above their 50-day moving averages is still off the norm of the past 200 days.
That momentum is still king is evidenced by the ability of stocks to rise in the face of another dollop of glum corporate and economic reports. Certainly nothing out of Alcoa ( AA) or Nokia ( NOK) or Caterpillar ( CAT) in the past 24 hours has suggested better times ahead. Tech stocks continue to outperform, but what about a DigiTimes report on Tuesday that Taiwan-based PC vendors expect no benefit at all from the release of Microsoft's ( MSFT) upcoming Windows 7 operating system? Consumers are paying more attention to price than specifications, it seems. This newfound ability to enjoy the ride was echoed in the day's economic data, which went one better by spinning tepid data into positive news. How many "Housing Starts Lift Stocks" headlines did you see today? As econo-blogger Barry Ritholtz pointed out, the news was somewhat less ecstatic. Single-family starts in February were essentially unchanged, and the numbers were still down 50% from a year ago, marking the worst four-month stretch since the data has been collected. Similar short shrift was given to banking analyst Meredith Whitney's comments on Tuesday that the banking sector faces a similar fate as last year with different assets being purged. And Monday's news that industrial production has now fallen to 2002 levels has faded into the mist, hasn't it? Investors have no doubt needed the respite from the beatdown they've suffered for the past six months. But the economic and corporate struggles in the months ahead still have a lot to say about the direction of stocks, regardless of the current momentum.