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Holiday sales are off to a solid start. But with ‘Fiscal Cliff’ negotiations getting into high gear as Congress gets back to work this week, attention will likely shift to this looming deadline.

Stocks made good gains last week as the political leadership was away. But the gains may get hard to sustain as the nitty-gritty of the actual talks get underway.

Total spending over the Thanksgiving weekend increased 13% from the year-ago period, according to the National Retail Federation. This is lower than the 16% spending growth achieved over the weekend last year, but is nevertheless a solid start to the holiday shopping season.

Online sales are becoming a much bigger slice of the spending pie, with more than half of consumers reporting having shopped on the Internet over the weekend. This bodes well for merchants with stronger online presences for today’s so-called Cyber Monday traffic. Wal-Mart (WMT - Analyst Report), Target (TGT - Analyst Report), Best Buy (BBY - Analyst Report) and others appear to have made strong headways on that front and seem well-positioned to provide Amazon (AMZN - Analyst Report) with credible competitive challenges this year.

We don’t have much on the economic calendar today, though the rest of this week brings in the October Durable Goods, New Home Sales and Personal Income & Spending data. We also have the second read on the third quarter GDP report coming out on Thursday, which is expected to get revised upwards from the originally reported 2% growth pace. And next week’s all important November non-farm payroll report may not be as illustrative of actual ground realities due to Superstorm Sandy’s effects.

All of these reports are useful, but markets will be particularly focused on developments on the ‘Fiscal Cliff’ front. It will be nice if the final decision doesn’t get pushed to the last minute, but past history shows that to be the most likely outcome.

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