Car sales should show economic engine running

November car sales should be robust, confirming the trend of an improving economy and a consumer who’s willing to spend.

Vehicle sales for November are expected to come in at an annualized selling pace of 16.7 million to 17 million, above the current full year rate of 16.5 million.

Chrysler, the first automaker to report November sales early Tuesday, saw sales jump 20 percent, as low gas prices and Black Friday promotions boosted traffic.

Read More Black Friday car sales explode

That comes in the face of spotty economic data from last week that missed the mark and the National Retail Federation’s disappointing report that Black Friday weekend sales fell 11 percent.

“(Stocks) started off trading on the retail report that looked kind of funky,” said Mark Luschini, chief investment strategist at Janney Montgomery. He said the Black Friday report likely reflected a shopping pattern that includes more online shopping and holiday spending over a longer period of time.

He said the fact that the ISM manufacturing report Monday was nearly flat last month was a positive. It fell slightly to 58.7 from a 3½ year high of 59 in October.

Getty Images

Getty Images

But inside that number, new orders rose to the highest level since August and export growth increased—positive signs for the economy.

Luschini said the market has been worrying that the U.S. economy was sliding with overseas economies, after last week’s string of disappointing data, including weaker-than-expected personal spending and durable goods reports.

Bond yields moved slightly higher Monday with bond prices dropping for the first time in seven sessions, in part because of the stronger ISM report stood in contrast to weaker manufacturing data from Europe and China.

Traders said the market also responded slightly to comments from New York Fed President William Dudley that the Fed could begin to raise rates in the middle of next year.

The S&P 500 was down 14 at 2,053, but oil rebounded more than 4 percent to $69 barrel after U.S. crude skidded 10 percent Friday. Gold also recovered from an overnightsell off, finishing up more than 3.5 percent .

Read More Gold above $1,200 with wind at its back for now

Traders will be watching more Fed speak Tuesday, with Fed Gov. Lael Brainard speaking at noon EST on economic growth and other matters.

What else to watch Tuesday

Earnings: Bank of Montreal, Bob Evans

November car sales

8:30 a.m. Fed Chair Janet Yellen greets students at Fed

10 a.m.: Construction spending

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