In Wednesday's Daily Market Commentary webinar, we had several questions about why the Macy's Inc. (M) earnings report was so important to the rest of the market. On the strength of its earnings and "comparable" sales, the stock rallied nearly 11%, which is remarkable considering the shrinking margins and rising costs with which the industry has been struggling.

Consumer Spending Can Make or Break the Rally

Most of the U.S. economy is driven by consumption. Macy's, Nordstrom Inc. (JWN), J.C. Penney (JCP), Kohl's (KSS), and even Walmart Inc. (WMT) may only be a small percentage of the sectors comprising consumer spending and consumption, but they are important indicators of strength or weakness. 

Macy's reported 3.9% higher sales at locations that are still open and similar to stores open last year. Even with an appropriate discount for survivorship bias in the report, these are still very good numbers - or at least better than expected. The stock broke its prior highs on the news and is now above short-term resistance. From a technical perspective, this bodes well for Macy's and the rest of the market, which should be confirmed by the other stocks in the same sector reporting on Thursday.