Futures Extend Gains After Economic News

Futures added to previous gains Tuesday after retail sales fell less than expected in May and producer price index climbed.

Retail sales, which provide a snapshot of consumption, fell for the first time in 11 months, although the decline was less than expected. Total retail sales slipped 0.2 percent, according to the Commerce Department. Economists had forecast retail sales falling 0.4 percent, according to Reuters.

Meanwhile, the Producer Price Index, which measures price changes before they reach the consumer, increased 0.2 percent in May, according to the Labor Department, down sharply from a 0.8 percent rise in April and a 0.7 percent increase in March.

Excluding the volatile food and energy categories, the core index also increased 0.2 percent, driven by higher prices for plastics, clothing and new cars. The core index has risen 2.1 percent in the past year.

“The way that the markets been trading these days, market’s been very short sighted on positive news and focused on negative news,” said Michael Gault, senior portfolio strategist for Weiser Capital Management.

Gault noted that economic news in the last few weeks has been poor and the markets are going to need a “greater macro picture” to see a “more consistent and a less volatile road ahead.”

Futures were initially boosted after the Chinese central bank raised reserve ratios requirement for banks for the ninth time since last October after data showed inflation rising to its highest level in almost three years.

Analysts said the data suggested a measured slowdown of the Chinese economy and this encouraged investors to go into risky assets. But economist Nouriel Roubini said China is facing a "meaningful probability" of a hard landing.

Goldman Sachshired a top Libyan official's brother in its offices in London and Dubai while it was carrying out trades for the country's sovereign wealth fund, the Financial Times reported.

Appleagreed to settle a long-running row over patents with Nokia , which said this would give a boost to its second-quarter earnings. Meanwhile, Apple is slated to start selling its latest Macbook Air in late June.

Hewlett-Packard announced the departure of two other senior officers and said a veteran executive was moving to its board amid another management shakeup under its new CEO Leo Apotheker.

Best Buy jumped in pre-market trading after the electronics retailer's results beat estimates and backed its earnings outlook for the year.

Business inventories data for April will be released at 10 am ET.

In the US, Democrats and Republicans will intensify their negotiations on whether to raise the debt ceiling this week, but the sputtering job growth could complicate these talks even further.

European shares gained, buoyed by miners, as investors bought into riskier assets after Chinese data suggested the country would avoid a hard landing.

And the IMF has blocked Israel Central Bank Governor Stanley Fischer's bid to run for the position of president, as he is two years older than the age limit for a first-time president.

On Tap This Week:

TUESDAY: Business inventories
WEDNESDAY: Weekly mortgage apps, CPI, Empire state mfg survey, Treasury international capital, industrial production, housing market index, Geithner testifies before House Financial Services, oil inventories, credit card default rates reported, Dell shareholder mtg, Google Chromebook goes on sale
THURSDAY: Housing sales, jobless claims, current account, Philadelphia Fed survey, Fed's Fisher speaks, money supply; earnings from Kroger, Pier 1 Imports, Smithfield Foods, Research In Motion
FRIDAY: Consumer sentiment, leading indicators, quadruple witching

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