The Globe and Mail

Here's Allan Robinson's At The Bell which you'll find in Tuesday's newspaper:

The downtrodden U.S. consumer is just another in the litany of worries confronting investors, but nevertheless it looks like a stealth rally may be under way in the retail sector.

During the past few weeks, the shares of companies like Home Depot Inc. , Target Corp. and Saks Inc. have all surged from their recent low points and all three are scheduled to report their second-quarter results today.

Other U.S. retailers showing some signs of life during the past few days after seeing a steady erosion in their share prices include discount store operator Kohls Corp. and department stores like R. H. Macy & Co. and J.C. Penney Co. Inc.

The rebound in the depressed retailers coincides with the drop in energy prices and the spending of the tax rebate cheques, but the big question facing investors is whether the rebound is sustainable. For now, they seem happy to see the results such as Lowes Cos. , which reported yesterday, were not as bad as expected.

“Energy prices, hopefully, are in the rearview mirror, but housing is less certain,” Jeff Malcom, portfolio manager at Horan Capital Management, told Bloomberg News recently. “No one knows when that's going to bottom. I can hope we're getting near the end here.”

Housing remains a critical factor in how the consumer is feeling and today's release of the housing starts data is not expected to buoy confidence levels now that there is a glut of houses available for sale. U.S. housing starts are forecast to have fallen to 960,000 in July from 1,066,000 in June, according to a survey of economists by Bloomberg.

“The cash-strapped U.S. consumer is keeping a tight hold on its wallet, pressured by eroding household wealth, deteriorating employment conditions, restrictive lending standards and high food and energy bills,” said Gorica Djeric, an economist with Scotia Capital Inc. “Consumption is forecast to contribute on average only 0.9 per cent to the U.S. economy between 2008 and 2009, a stark contrast to the 2.5 per cent added on average from 2000 to 2007,” she said.

“I think the uncertainty remains widespread,” Ms. Djeric said. “On a broad basis, the consumer is in a very tight spot. The downturn may not be as sharp as previously expected, but it will probably last for a while.”