Futures Rise After Upbeat Housing Data
Stock futures rose Tuesday after a report that housing starts reached their highest level in four months, and as investors await a Federal Reserve policy meeting that may discuss the need for further easing.
Housing starts rose 10.5 percent, the biggest boost since November, to a seasonally adjusted annual rate of 598,000, which was more than expected, the Commerce Department said. Analysts polled by Reuters had expected starts to rise to only 550,000.
Permits for new construction, meanwhile, surged 1.8 percent to a 569,000-pace in August, after a 4.1 percent drop in July, according to the Commerce Department.
Few expect the Fed to apply another dose of quantitative easing (QE) when it announces its decision at 2:15 pm New York time, but there are concerns that evidence of a weakening economy will spark a debate on whether more stimulus is needed.
People are still feeling the effects of the financial crisis, President Barack Obama said at CNBC's Town Hall event on Monday. But he defended his administration’s efforts to fix the economic problems.
"Obviously for the millions of people still out of work, people who have seen their home values decline, people struggling to pay their home bills every day, it's still very real for them," Obama said.
In earnings news, investors will be looking out for earnings announcements from AutoZone, Carnival and Conagra before the bell.
Clorox on Tuesday announced the sale of its global auto care business to Avista Capital, and said it expects to receive $780 million in cash from the deal. The proceeds will be used to buy back stock over the rest of this fiscal year, Clorox said.
Vivus said studies of its experimental weight-loss drug Qnexa showed solid weight loss and no side effects for most of its users, sending shares up 11 percent in premarket trading.
Hewlett-Packard and Oracle settled their legal dispute over Oracle's employment of ex-HP CEO Mark Hurd. Also in the technology sector, Nokia delayed introduction of its newest smartphone for a second time; the shares fell in European trading.
BHP Billiton has extended the deadline for its Potash takeover bid until November 18, after a Canadian regulator asked for more information. Analysts now think the takeover battle will drag on into 2011.
Dow component Merck is also in the spotlight as it holds a day-long meeting with analysts.
Increasing pressure on peripheral euro zone debt eased after an Irish bond auction was oversubscribed. Greek and Spanish auctions of shorter term debt also went smoothly.