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Futures Point to Lower Open After Alcoa

Stock index futures slightly pared losses, although remained down, after the government reported import prices rose in March, and the trade deficit fell.

Futures had already fallen after news that Alcoa's sales were lower than expected. Alcoa, the world's largest producer of aluminum, is the first Dow component to report quarterly results, and is considered a bellwether for earnings season.

Import prices rose 2.7 percent in March from a 1.4 percent gain in February thanks to higher oil and food prices, the Labor Department said Tuesday.

The trade deficit fell 2.6 percent in February to $45.8 billion, as exports fell 1.4 percent to $165.1 billion, the Commerce Department said. Imports fell 1.7 percent to $210.9 billion.

Alcoa reported first-quarter earnings of 28 cents per share, excluding one-time items. Sales for the most recent quarter rose to $5.96 billion, up from $4.89 billion last year.

But revenue missed analysts’ expectations. Alcoa was seen earning 27 cents a share on revenue of $6.07 billion, according to a consensus estimate from Thomson Reuters.

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Also in earnings news, Chevron indicated its exploration and production earnings would be higher in the first quarter than they were in the fourth quarter.

JPMorgan Chase , Bank of America and Google will report earnings later in the week.

Small business optimism fell in March, which also damped investor enthuasiasm. The National Federation of Independent Business' overall optimism index fell 2.6 points to 91.9. Although more owners raised prices, many expect economic activity to slow in the next six months.

Also in economic news, the Federal Budget deficit will be released at 2 p.m., and is expected to have widened from $220.9 billion in February 2010 to $222.5 billion in February 2011. Analysts polled by Briefing.com had expected the deficit to narrow to £195 billion.

Meanwhile, the Japanese government raised the severity of the incident level at the Fukushima nuclear power plant from 5 to 7 putting it on the same level as the Chernobyl disaster in Ukraine in 1986.

Hidehiko Nishiyama, a deputy director-general of the Nuclear and Industrial Safety Agency (NISA), said the decision to upgrade the warning about the radiation leak was the based on cumulative quantities of radiation released since the earthquake and tsunami which devastated Japan last month.

In Europe, UK Consumer Price Index (CPI) inflation for March was reported to have come down to 4 percent from a recent high of 4.4 percent.

While the latest inflation report surprised many analysts who believed inflation would hold steady, the number still remains 2 percent above the Bank of England’starget. Sterling fell around 0.5 percent against the dollar on the news.

On Tap This Week:

TUESDAY: 3-year Treasury note auction, Treasury budget, CFTC's Gensler testifies on derivatives regulation, Dudley speaks, Bank of NY Mellon shareholder meeting
WEDNESDAY: Weekly mortgage applications, retail sales, business inventories, oil inventories, 10-year Treasury note auction, Beige Book, United Technologies shareholder meeting; earnings from JPMorgan before-the-bell.
THURSDAY: Weekly jobless claims, PPI, 30-year Treasury bond auction, Kocherlakota speaks, Plosser speaks, Lacker speaks, Nestle shareholder meeting; earnings from Hasbro before-the-bell and Google after-the-bell.
FRIDAY: CPI, Empire state manufacturing survey, Treasury international capital, industrial production, consumer sentiment, credit card default rates reported; Evans speaks, Hoenig speaks, G24/International Monetary Affairs meeting; Earnings from Bank of America and Mattel before-the-bell.

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