Will American consumers bring holiday cheer to retailers? The latest retail sales figures offer mixed signals.

Overall, sales jumped 1.4% in October over the prior month, the Commerce Department said. Analysts had expected retailers to post a 0.9% sales gain in October, following a 1.5% decline in September.

The sales surprise gave the market an early spark, but it was driven largely by a rebound in demand for autos. (Weak auto sales dragged down spending in September and car sales have picked up since then.) Excluding car and truck sales, retail sales climbed 0.2%, below consensus estimates of a 0.4% bump.

Now, heading into the critical holiday season, the question appears to be not whether Americans will spend -- but where and how much. Retailers such as T.J. Maxx (TJX), Saks (SKS) and Nordstrom (JWN) have reported gains in same-store sales lately, an encouraging sign. But will shoppers move beyond the bargain basement and start spending more freely on discretionary items? Preliminary figures for consumer sentiment in November posted an ominous (and unexpected) drop, according to the University of Michigan index, which fell to a reading of 66 from 70.6 in October. Consumers are bracing for a "slow and painful recovery in the near term," says Barclays Capital economist Theresa Chen. And that could mean fewer big-ticket purchases and a leaner pile of presents under the tree. Indeed, two-thirds of consumers plan to shop differently due to concerns about the economy, according to a recent Deloitte survey of over 10,000 adults. Americans also plan to buy fewer gifts than last year, and they plan to spend less -- $452 this season compared with $532 in 2008 and $569 in 2007.

On the earnings front, some retailers are meeting or beating estimates on cost cuts and savvy inventory management -- not a big bounce in spending . That was the case with Wal-Mart (WMT). The company s fiscal third-quarter earnings rose 3.2%, beating expectations, but same store sales still posted a 0.4% decline. Wal-Mart's U.S. chief, Eduardo Castro-Wright, told investors that "customers may be more cautious in their holiday spending." And other Wal-Mart executives reiterated that spending patterns aren t what they used to be. "The shopper has reset how he is spending money," Wal-Mart treasurer Charles Holley said, "and that has affected retail in demand."

This article is an excerpt from our Early Bird markets story , which was originally published the morning of Nov. 16.