Both discount retail giant Wal-Mart Stores Inc. (WMT) and high-end fashion bellwether maker Liz Claiborne Inc. (LIZ) reported earnings yesterday (Tuesday), but their vastly divergent results offered glimpse into the often-evasive mind of the American consumer.

The Bentonville, Ark.-based Wal-Mart, a beacon of blue-collar commercialism known for its low prices and a varied product line that includes clothing, food, and car tires, posted a strong sales numbers. The company posted a quarterly gain with net income that increased 6.9% to $2.8 billion, and diluted earnings per share of 76 cents. [Please click here for a full story on Wal-Mart’s earnings in today’s issue of Money Morning.]

Meanwhile, the New York-based Liz Claiborne, maker of such top-end products such as Kate Spade handbags and Juicy Couture clothing, reported a loss of $31 million, or 33 cents per share, compared with net income of $16.2 million, or 16 cents, for the same period a year ago.

Indeed, consumers are still spending, but their money is going towards necessities, not luxuries. And with soaring commodity prices putting upward pressure on the costs of all kinds of goods including food and fuel, an increase in total sales volume doesn’t always translate to a fatter bottom line.

Just ask Liz Claiborne - the firm wasn’t able to turn a 4.9% increase in sales for the quarter into profits, causing the company to lower future guidance.

And even with a quarterly gain under its belt, Wal-Mart Chief Executive Officer H. Lee Scott acknowledged "uncertainties about the rest of the year." 

Also yesterday, the Commerce Department announced that U.S. retail sales dropped 0.2% in April, due to a 2.8% decline in auto sales. Excluding autos, retails sales actually gained 0.5%.

"U.S. consumers still have some gas left in the tank, even if it costs more to fill it up," wrote Meny Grauman, an economist for CIBC World Markets Inc., MarketWatch reported.

The 0.2% dip was less than expected, as the median of economist expectations was a decline of 0.3%. Coupled with the increase in retail sales in March, some see this as a sign that the U.S. economy is recovering.

"The worst fears are not being realized," Jay Feldman, an economist at Credit Suisse Holdings Inc. in New York told Bloomberg News. "We still think growth is going to be soft," but billions of dollars in economic stimulus checks on the way to U.S. consumers may "keep us above water," he said.

Retailers are encouraging taxpayers to spend their government-issued windfall. And if they do, those checks could provide a nice bump for second and third quarter retail sales.

But while the economy might be turning a corner, it could still be too soon to jump back into retail stocks.

"At some point, of course, the economy will rebound and so will retail," said Melly Alazraki of BloggingStocks. "The time to get back into this sector will be when the first signs of a recovery appear. But right now, no one is sure when that will happen and the expectation is for at least two more quarters of weak results."