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Futures Remain Lower After PPI, Earnings

CNBC.com
Tuesday, 16 Nov 2010 | 9:10 AM ET

U.S. stock index futures remained weak ahead of the open Tuesday after news that core producer prices had their largest drop in four years.

Futures had been lower already despite better-than-expected earnings from Home Depot, as debt concerns in periphery euro-zone countries continued to drag on investor sentiment.

The producer price index rose 0.4 percentin October, the same level as September, but core PPI, which excludes volatile food and energy prices, fell 0.6 percent, after rising 0.1 percent in September.

Home Depot posted net earnings of 51 cents per share for its fiscal third-quarter, up from 41 cents per share in the same period last year. The home-improvement retailer also raised its guidance for the full year.

In addition, Wal-Mart posted a higher quarterly profitand raised its full-year earnings forecast, but U.S. same-store sales declined as its shoppers remain under pressure in a weak economy.

High-end retailer Saks reported a sharply higher quarterly profit, helped by a surge in luxury spending, as financial markets healed and shoppers grew more willing to pay full price for its wares, and said it expects those trends to continue during the holiday quarter.

Abercrombie & Fitch posted a bigger quarterly profit and the teen apparel retailer beat Wall Street estimates, led by strong demand in international markets.

TJX beat its own forecasts by reporting a 7 percent rise in third-quarter earnings, as the discount retailer benefited from shoppers interested in getting the most from their dollar. Sales at the TJX rose 5.4 percent for the quarter.

Honeywelllowered its forecast for earningsthis year to about $1.86 a share from its previous forecast of $2.52 a share, but the revision reflects a change in pension accounting.

The retail sector will be in focus as the all-important holiday shopping season heats up and after better-than-expected October retail sales dataMonday.

New York Fed President Bill Dudley backed up comments from Treasury Secretary Timothy Geithner last week by saying that Fed policy is not intended to weaken the dollar.

Treasury international capital flow data is due at 9 a.m., and industrial production and capacity utilization figures will be released at 9:15 a.m. The National Association of Home Builders releases its housing index at 10 a.m.

European shares were lower, with mining stocks in the red. European finance ministers will be meeting in Brussels to discuss a mechanism for resolving the euro-zone crisis. A possible bailout of Ireland was also expected to be discussed.

Asian stocks also saw heavy selling. The Shanghai Composite Index fell 4 percent on worries about rate tightening in China to combat inflation. In commodities, the price of gold and oil gave back some of their recent gains as the dollar rose versus the yen.

Coming Up This Week:

MONDAY: 13-F filings due; after-the-bell earnings from Nordstrom and Urban Outfitters.
TUESDAY: PPI, Treasury international capital, industrial production, housing market index, Microsoft shareholders meeting, Atlanta Fed Pres Lockhart speaks; Earnings from Home Depot, Wal-Mart, TJX and Saks.
WEDNESDAY: Weekly mortgage applications, CPI, housing starts, oil inventories, St. Louis Fed Pres Bullard speaks, GM IPO pricing, LA auto show kicks off, Qualcomm analyst meeting; Earnings from Target and Applied Materials.
THURSDAY: Weekly jobless claims, leading indicators, Philadelphia Fed survey, Cisco shareholder meeting; Earnings from Dell and Gap.
FRIDAY: Bernanke speaks at ECB Central Banking Conference, Harry Potter movie premieres.

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