NEW YORK ( TheStreet) -- If there's room for debate about whether it's a bazooka, it's probably not a bazooka.

That's the early read on the latest incremental progress from across the pond. European leaders keep unveiling new wrinkles in the grand plan to contain the region's sovereign debt crisis but until they willing to get bogged down with specifics, investors across the globe are likely to remain wary.

Still, the latest news involves creating vehicles to provide some bond protection (20%-30% of the principal amount) in the form of tradable certificates to be issued to buyers of sovereign debt and leveraging the lending power of the European Financial Stability Fund by up to ¿250 billion from its current level of ¿440 billion. Once again, the details are scant but there's an argument to be made that this is a promising start.

Given the recent action in U.S. stocks -- a ugly exodus for most of November giving way to a light-volume burst of buying this week that's polished up performance a good bit and brought the Dow Jones Industrial Average back to the brink of positive territory for 2011 -- this may well be enough to bring out the buyers who could rationalize that help is on the way in early 2012 when European officials said these tools will be available.

Right now, it feels like the market wants to kick off a Santa Claus rally but isn't quite sure that the coast is clear. Between Janet Yellen's clear QE3 hint earlier Tuesday, recent improvement in economic data and December's strong historical track record, the stage looks set for a strong finish to 2011 if Europe can cooperate and keep the scary headlines to a minimum.

But that's a pretty big if and investors whipsawed since volatility spiked in August could just as easily decide to concentrate on picking out presents rather than stocks this time around.

As for Wednesday, it's a busy day for economic data. There's the weekly mortgage applications index from the Mortgage Bankers Association at 7 a.m. ET; the monthly layoffs report from Challenger Gray & Christmas for November at 7:30 a.m. ET; the monthly payrolls report from Automatic Data Processing for November at 8:15 a.m. ET; reads on productivity and unit labor costs for the third quarter at 8:30 a.m. ET; Chicago purchasing managers index for November at 9:45 a.m. ET; pending home sales for September at 10 a.m. ET; and the release of the Federal Reserve's Beige Book, providing some detail on anecdotal evidence of economic conditions for November, at 2 p.m. ET.

American Eagle Outfitters ( AEO) is one of the stragglers (many of whom are retailers) reporting earnings this week. The Pittsburgh, Pa.-based casual apparel retailer is slated to deliver its fiscal third-quarter results before Wednesday's opening bell, and the average estimate of analysts polled by Thomson Reuters is for a profit of 27 cents a share in the October-ended period.

Year-to-date, the stock is down more than 7% based on Tuesday's regular session close at $13.43, and Wall Street is pretty bearish with 23 of the 30 analysts covering the shares at either hold (21) or underperform (2) with the median 12-month price target sitting at $14.

American Eagle has come in short of the consensus profit view in its past two quarters, but it should be on solid ground this time around as it provided guidance for earnings of 26 to 27 cents a share in the quarter on Nov. 2 when it said sales totaled $832 million for the three-month period, a year-over-year increase of 11%.

Sterne Agee previewed the report on Tuesday, putting the emphasis on what kind of guidance the company may offer up. The firm has a neutral rating (the equivalent of a hold) on the stock with a $15 price target, and said American Eagle seemed to have a very strong showing on Black Friday, which may have prompted it to pull back a bit on its online discounting this week.

"AEO appeared to be one of the big winners on Black Friday, as a 40% off promotion up from 20% last year drove massive traffic to stores and long lines at the registers," Sterne Agee observed. "AEO was slightly less promotional than Abercrombie, which offered 50% off before 9 a.m. and 40% off thereafter, and Aeropostale, which offered 50% off plus an extra 20% off (for a total 60% discount). Despite being slightly less promotional, our checks suggest that AEO outperformed its teen retail rivals, particularly ARO."

That perception prompted the firm to lift its estimate for fourth-quarter same store sales growth to 6% from 3% but Sterne Agee also factored in additional promotions and cut its gross margin view for the period to 36.5%. That led it to lower its fourth-quarter earnings estimate to 37 cents a share from 40 cents. The current consensus view is for earnings of 39 cents a share in the January-ending period.

The rest of Wednesday's reporting roster includes Aeropostale ( ARO), Coldwater Creek ( CWTR), Express ( EXPR), Finisar ( FNSR), Fresh Market ( TFM), Guess? ( GES), Jos. A Bank Clothiers ( JOSB), Krispy Kreme Doughnuts ( KKD), La-Z-Boy ( LZB), Shuffle Master ( SHFL), and United Natural Foods ( UNFI).

And finally, the late news on Tuesday included a raft of credit rating downgrades of the banks by Standard & Poor's, which was telegraphed in advance by the ratings agency but still prompted some light selling in the after-hours session with Bank of America ( BAC) dipping below $5 in extended trades, and Citigroup ( C) and JPMorgan Chase ( JPM) sliding somewhat.

This development can't be painted as a positive for the financials but it's not likely to cast too big a shadow on Wednesday, especially considering the pressures the group is already under. It was notable that the banks didn't participate in Tuesday's gains and the ongoing weakness in the group remains an obstacle for the broad market.

-- Written by Michael Baron in New York.

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

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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