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Futures See-Saw, Following Best Buy Blues

Bob Pisani is off; this post was written by CNBC producer Robert Hum.

Futures have see-sawed this morning ahead of the Fed’s last meeting of the year today. S&P futures dropped a notable 4 points around 8am ET as Best Buy’s poor earnings rattled investors.

But half an hour later, following some mixed economic data, futures rebound of their lows and have since recovered most of their losses following the Best Buy news.

The government reported November retail sales rose 0.8 percent, more than the 0.5 percent growth economists had expected. Also helping was an upwards revision to the October data, which rose 1.7 percent, up from up 1.2 percent. The better retail sales numbers overshadowed hotter PPI data (up 0.8 percent vs. up 0.5 percent consensus), with core PPI coming in at up 0.3 percent vs. up 0.2 percent consensus.

Best Buy Blues

An ugly Q3 earnings report from Best Buy this morning. The electronics retail giant reported missed on its top and bottom lines(earnings of $0.54 were below consensus of $0.61. U.S. same-store sales fell 5 percent (more than the company had expected) on lower electronics demand.

Very disconcerting is the 110 basis point decline in market share, even from a lack of a pure electronics retailer like its former competitor Circuit City. So where are consumers buying electronics? Perhaps at discounters like Wal-Mart and Target , club stores like Costco and Sam’s Club (owned by Wal-Mart), and of course online at Amazon.com .

A big problem: consumer demand for big ticket items like TVs and other entertainment hardware and software was weak. Comps in those areas decline at a low double-digit rate as TV prices and unit sales dropped.

Some bright spots: margins/expenses remained solid and mobile phone and smartphone comp store sales were up low double-digits.

Nevertheless much uncertainty on sales surrounds the retailer for the rest of the year. Best Buy cut its full-year guidance to $3.20-$3.40, below $3.59 consensus. But that reduction isn’t just due to the weak Q3…the new guidance implies very weak Q4 earnings too ($1.70-$1.90 vs. $2.05 consensus).

Elsewhere:

BP rises 3 percent after announcing the sale of some assets in Pakistan. The oil firm will sell exploration and production assets in Pakistan to United Energy Group for $775 million in cash.

Railcar maker Greenbrier is down 5 percent after announcing a 3 million share stock offering. That’s about a 14 percent increase in shares from its current 21.9 million shares outstanding.

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  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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