The Dow: Calm Before the Storm?

After last week was marred by a negative session, markets started this week on a mixed tone. It was a relatively light day regarding macro news, so the day spent treading water was not surprising. However, thanks to one important economic indicator released tomorrow and comments from the Federal Reserve, investors should consider this the calm before the storm.

More on that in a minute, but first, let's check into how the three major indexes fared today:

Source: Yahoo! Finance.

The three indexes saw varied performances, with the Dow gaining slightly, the S&P 500 flat, and the Nasdaq declining a little. However the real theme was limited movement on light trading volume. With no news moving the markets, the indexes didn't budge. That is likely to change tomorrow.

The Federal Reserves' Open Market Committee (FOMC) meets tomorrow and investors are holding out hope for a third round of quantitative easing to boost the markets. However, recent comments by Ben Bernanke indicate that won't be happening soon, if at all, even if he softens the tone some to keep Q3 dreams alive and the market buoyant.

Also, retail sales data is set to be released tomorrow morning, either confirming that the recovery is ongoing or potentially causing heavy selling if investors feel the market has overrun the actual economic gains of the past months. However, early predictions put the gain at over 1%, greater than the 0.4% seen in January, and what could be the indicator's best performance in months.

One promising sign is that Dow component retailers Wal-Mart (NYSE: WMT) and Home Depot (NYSE: HD) both traded up 1% and were some of the index's leading gainers. Furthermore, despite their respective commodities of oil and aluminum dropping today, both Exxon Mobil (NYSE: XOM) and Alcoa (NYSE: AA) had big gains. In fact, Exxon was the Dow's best performer! This could mean that the Street expects good things either from the FOMC meeting or retail sales, which would a strengthening economy and the accompanying increased commodity prices that brings.

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