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Futures Slightly Weaker After Retail Sales

Stocks looked set to take a breather from recent gains Tuesday, at least at the opening bell, as stock index futures fell despite an gain in retail sales that was slightly better than expected.

Futures briefly turned positive on the sales numbers, but were back slightly below breakeven after the market digested the numbers.

The government said total retail sales gained 0.4 percent in August, slightly ahead of expectations of 0.3 percent. Core sales, which exclude food and transportation, rose 0.6 percent, also better than expectations.

European shares edged lower as banks gave back some of their gains from the previous session. Asian stocks ended mixed after Japanese Prime Minister Naoto Kan won a leadership vote to remain in power. The dollar fell against the yen on the news, but the Nikkei 225 closed lower.

The yuan hit a new post-revaluation high against the dollar, as the Chinese authorities are seen yielding to US pressure to let the currency appreciate.

Futures briefly added to losses after the National Federation of Independent Businesses said its small business index showed a slight increasein optimism in August but remains consistent with expectations of a recession.

Business inventories for July will be released at 10 a.m., with economists expecting a 0.8 percent rise from June's 0.3 percent increase.

Billionaire investor Warren Buffett said he doesn't expect the U.S. economy to slip back into a recession, according to reports.

And there are still mixed messages about investor confidence. A survey conducted by CNBC and AP found that many individual investors see the stock market as unfair to them and they have little confidence in regulators to fix it.

But Morgan Stanley CEO and President James Gorman told CNBC confidence among investors is slowly returning.

In company news, American International Group is plotting its way out of federal care, with plans to convert the government's preferred shares to common stock, which then will be sold off gradually, according to the Wall Street Journal.

AIG shares fell 1.6 percent in premarket trading.

In earnings news, Best Buyreported net income rose 60 percent in its fiscal second quarter, better than forecasted, sending the electronics retailer's stock up nearly 9 percent in premarket trading. Revenue rose 3 percent to $11.34 billion, from $11.02 billion last year.

And Kroger posted strong quarterly earnings and confirmed its fiscal year outlook for $1.60 to $1.80 a share on sales growth of 2 percent to 3 percent, excluding gasoline sales. The supermarket chain's shares rose 2 percent in the premarket.

On the Calendar:

TUESDAY: BD/TIPP economic optimism index, business inventories, UN General Assembly, API weekly report
WEDNESDAY: MBA mortgage applications, Empire State manufacturing survey, import and export prices, industrial production, weekly oil inventories
THURSDAY: PPI, current account, jobless claims, Phili Fed survey; before-the-bell earnings from FedEx, after-the-bell earnings from Oracle and Research In Motion
FRIDAY: CPI, consumer sentiment

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