Consumers walk around the Manhattan Mall in New York City.
Consumers walk around the Manhattan Mall in New York City. - 
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KAI RYSSDAL: Today's news on retail sales gave Wall Street what some analysts were calling an "upside surprise." The numbers seemed to show an unexpected rise in sales during January. Investors decided that was cause enough for celebration because, who knows, maybe the economy didn't slip into a recession last month after all. Maybe the American consumer will muddle through.

But Marketplace's Bob Moon reports there are plenty of people who don't see any upside surprise, just more downside reality.

BOB MOON: Attention Wall Street, your reality check just bounced.

JOEL NAROFF: If people think that this was a good report, I think they've likely misread it.

Commerce Bank chief economist Joel Naroff says stock-market traders seem to be grasping at any sign that things aren't really so bad.

NAROFF: A good surprise is taken as positive news, even if that news isn't very positive, which is the case today.

The general consensus had been that retail sales would drop by at least three-tenths of 1 percent in January. Instead, the Commerce Department reported a three-tenths percent increase. But read beyond the headline number and purchases outside automobiles and gasoline were unchanged. In other words, to Wall Street no news is good news. But Naroff says the reality is consumer spending is slowing down.

NAROFF: The only good thing we can say about it, if it's a good thing, is that the consumer is not really stopping spending a whole lot, but they are clearly spending an awful lot less than they had been.

At A.G. Edwards, chief market strategist Al Goldman has been scratching his head over the market's rally this week. He says corporate profit reports will be the next unwelcome surprise.

AL GOLDMAN: Corporate earnings are not going to be up 15 to 16 percent like analysts are predicting, and that enthusiasm will be taken out of the marketplace sooner or later, and I think sooner.

Goldman says some traders were obviously assuming prices are nearing their low point and doing what he calls "some bottom fishing" today, but he thinks they're too optimistic. Today's retail numbers do seem to support more interest-rate cutting by the Fed.

In Los Angeles, I'm Bob Moon for Marketplace.