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Wednesday’s market movement should be significantly driven by the Iowa Caucus results. If the tally were to show an electable, presidential and, most importantly, a Wall Street favorite as Iowa’s winner, the market should rally. Thus, the shortfall of Ron Paul, not a likely Wall Street favorite given his views on the Federal Reserve, should find approval from the market.

Furthermore, the strong performance of Mitt Romney should start stocks higher on Wednesday. That’s if investors understand the fact that Romney’s position on how to handle “Obamacare” is the one that is most likely to supplant it, given possible Supreme Court cohesion. Rick Santorum has a chance to perform decently through the national primary process, but it appears Romney has a better chance in the general election.

Look for stocks to support the GOP direction, if the Street gets Romney’s wise health care strategy. Stocks certainly have the advantage of momentum after Tuesday's enthusiastic start to 2012. The SPDR Dow Jones Industrial Average (NYSE: DIA) gained 1.5% on the day, and the SPDR S&P 500 (NYSE: SPY) rose 1.6%.

Challenger Gray & Christmas reports on Announced Job Cuts before the market opens Wednesday. I’m not expecting to see a big number in the holiday heartened period. In fact, I’ve warned over recent weeks that regularly soft initial jobless claims through December were more likely the result of holiday hearts and distraction than an economic revival.

Therefore, I expect a similarly soft result from Challenger’s report this month. Such a modest result, in my view, presents a different state of affairs than I see playing out over a longer term. That’s because of the global macroeconomic stumbling block I see weighing on economic recovery. November’s Job-Cuts Report showed announced layoffs were down 13% from the same month a year ago. Employment services firms Robert Half (NYSE: RHI) and Korn Ferry (NYSE: KFY) gained 0.7% and 4.0%, respectively, Tuesday.

Monthly Motor Vehicle Sales will be reported by the individual automakers for the month of December throughout the day Wednesday. Bloomberg’s survey of economists places the consensus view for a modest increase in the annual rate of domestic sales to 10.5 million vehicles, up from 10.3 million in November. Total motor vehicle sales are seen holding on at an annual rate of 13.6 million in December.

According to Barron’s query of analysts, General Motors (NYSE: GM) might post the best monthly growth. Thanks to the Barron’s mention, GM’s shares had a good day Tuesday, rising 3.9%. Lifted by the general market movement, the shares of Ford (NYSE: F) improved 3.4%, while Toyota (NYSE: TM) gained 2.5%, as Honda (NYSE: HMC) and Nissan (OTC: NSANY) rose 2.6% and 3%, respectively. Wednesday’s trading will be based solely on each individual automakers December performance.

The U.S. government will report on Factory Orders for the month of November at 10:00 AM. A day after the solid ISM Manufacturing data, it will be interesting to see what this measure of real activity has to say. ISM’s report is a survey of purchasing managers, while this data point looks at real orders.

Already reported, durable goods orders rose a strong 3.8% in November on civilian aircraft demand, and so forecasts for this aggregate measure are for a solid 2.0% increase on average. Factory orders decreased by 0.4% in October. The shares of industrials did particularly well Tuesday, with shares of Honeywell (NYSE: HON) and Deere (NYSE: DE) for instance, rising 2.3% and 2.5%, respectively. I do not foresee the factory orders report denting enthusiasm for the sector, given the support of durable goods orders.

The latest Weekly Same-Store Sales data from the International Council of Shopping Center (ICSC) will cover the week ending December 31. Sales results should mark a decrease from the pre-Christmas period for obvious reasons, but the period still includes the very busy post Christmas activity. However, that period is greatly influenced by gift card usage and returns. The pre-Christmas period marked a week-over-week sales increase of 0.9%, and year-to-year increase of 4.5%. Redbook reported that sales rose 4.3% on a year-to-year basis. Expect another strong year-over-year result, despite the week-to-week decline anticipated in this coming data. However, I continue to warn investors to sell their retailer shares now in order to hedge risk tied to deep discounting, tightening profit margins and the possibility of EPS short falls.

On the corporate wire, look for earnings news from Mosaic (NYSE: MOS), National American University Holdings (Nasdaq: NAUH), Resources Connection (Nasdaq: RECN), Sonic (Nasdaq: SONC), UniFirst (NYSE: UNF) and WSI Industries (Nasdaq: WSCI).

Source: The Market Should Rally On Romney's Iowa Performance