Wall Street will try to shake off its housing induced malaise on Wednesday, with the help of some good earnings news from the tech world.
But key inflation and housing data and another batch of major earnings before the bell will be play a big role in deciding the course for stocks. Housing gloom and a nagging fear that the credit crisis will once more rise to the surface hung like a weight on the stock market Tuesday.
Consumer inflation data in the form of the CPI will be released right at 8:30 a.m. New York time, as will housing starts data. CPI is expected to show a gain of 0.2% and housing starts are expected at 1.28 million units, according to Dow Jones.
CNBC's Rick Santelli said it will be just as important to look at the overall inflation number not just the core, which economists often reference. Core does not include food or energy. Grains have been rising sharply, and are beginning to impact food prices, and oil is at new highs.
"We shouldn't say ex-food and energy. We should be saying extreme food and energy," said Santelli.
The Fed's beige book on economic activity is released at 2 p.m.
J.P. Morgan Chase , Altria , Coca-Cola and United Technologies all report quarterly profits before the bell. Ebay and Washington Mutual report after the bell.
Three big tech names gave an after hours lift to what was a down day for the market. Weaker profits at Wells Fargo and other regional banks added to a negative mood from before the opening bell. Treasury Secretary Hank Paulson's comments about housing in the late morning also added to the gloomy tone, which actually was set the night before when Fed Chairman Ben Bernanke said housing could be a significant drag on U.S. economic growth into next year.
Intel , Yahoo , IBM all beat Wall Street estimates Tuesday afternoon with varying degrees of success. IBM says its net rose with the help of services revenues and acquisitions but it also saw a slowdown in hardware. Yahoo profits fell, but not as much expected. Its stock rocketed after hours. Intel though was the darling with a 43% jump in earnings and a bullish forecast. Intel predicted big margin gains in the fourth quarter and announced plans to cut 2,000 jobs. It also named Stacy Smith CFO, replacing Andy Bryant who becomes chief administrative officer.
Oil had another rocking day Tuesday, closing with a gain of $1.48, or 1.7% to $87.61 per barrel, after hitting a new intraday high of $88.20. More tension between Turkey and Northern Iraq pressured prices. A rebel Kurdish group threatened to attack the BP -led Baku-Tblisi-Ceyhan oil pipeline, the day before Turkey's parliament is expected to approve a motion allowing the government to attack Kurdish separatists in Iraq.
Oil inventories are reported Wednesday morning and could be very influential. "If we get a big draw in crude, that'll be the catalyst to go to $90," said MF Global vice president John Kilduff. If not, he said the market is due for a pull back.
India Rising (and Falling)
CNBC's Rebecca Jarvis reported Tuesday that Indian stocks and ETFs were under pressure in New York trading after a news report that India's stock market regulator proposed new restrictions on the investment of stocks and bonds in Indian companies through offshore derivative instruments. India's key Sensitive index was up 38% for the year and topped 19,000 for the first time Tuesday.
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