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Futures hold gains after housing data

U.S. stock index futures indicated Wall Street would follow European markets higher on Tuesday, after finishing at record highs on Monday.

April's housing starts totaled 1.135 million in April, above the 1.020 million estimate. The beat follows weak readings of little above 900,000 in February and March.

Bond yields extended gains after the better-than-expected data, with the U.S. 10-year Treasury yield at 2.27 percent.

Trader on the floor of the New York Stock Exchange.
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Trader on the floor of the New York Stock Exchange.

Major earnings on Tuesday include Home Depot, Wal-Mart, Dick's Sporting Goods, TJX Companies and Red Robin Gourmet Burgers before market open. Autodesk is due after the bell.

Home Depot—The home improvement chain reported adjusted quarterly profit of $1.16 per share, 1 cent above estimates, with revenue also above forecasts. Same-store sales were also better than expected, and Home Depot raised its full-year earnings and sales forecasts.

Wal-Mart—The retail giant earned an adjusted $1.03 per share for the first quarter, 1 cent below estimates, with revenue also below forecasts. Comparable-store sales also registered a lower-than-expected increase for the quarter.

Dick's Sporting Goods—The sporting goods retailer beat estimates by 4 cents with quarterly profit of 57 cents per share, with revenue essentially in line. However, its comparable-store sales increase of 1 percent was shy of the 1.5 percent consensus. The company also raised the low end of its full-year earnings guidance.

TJX Cos., the owner of off-price chains TJ Maxx and Marshalls, reported a 5.8 percent rise in quarterly sales as more customers visited its stores and the company expanded its offerings.

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European equities were sharply higher in morning trade on Tuesday, with investors reacting to corporate earnings and focusing on comments by a member of the European Central Bank.

Euro zone bond yields fell and the single currency lost over 1 percent against the dollar in the morning session, after Benoit Coeure, a member of the European Central Bank's Executive Board, hinted that the central bank could be ready to "front-load" its current quantitative easing (QE) program, according to Reuters. This would see the central bank buy up more assets and be more aggressive in the near term, which spurred investors into a bout of buying on Tuesday.

The euro fell to as low as $1.114 early in the day, after starting the session at $1.131. The 10-year benchmark German Bund yield briefly fell to 0.56 percent and the 10-year U.S. Treasury yield dipped below 2.20 percent.