Stock futures lower ahead of key readings on inflation and real estate; major retailers beat earnings expectations although Wal-Mart cautious on guidance.
May 16, 2006: 7:09 AM EDT


NEW YORK (CNNMoney.com) - Investors will be eagerly awaiting some government readings on inflation and the strength of home building ahead of trading Tuesday, following somewhat mixed results from some key retailers.

U.S. stock futures were down in early trading, although a comparison to fair value indicated a flat open for the blue chip S&P 500 and a lower open for the tech heavy Nasdaq, ahead of the economic reports.

Earnings reports from Wal-Mart Stores (Research) and Home Deport (Research) showed both beating estimates, although both had revenue slightly below forecasts. Both retailers are members of the Dow Jones industrial average.

Wal-Mart, the world's largest retailer, posted improved earnings in the fiscal first quarter, but warned that second quarter earnings per share would be at or below the current forecast. It reiterated its full-year earnings guidance. The current consensus full-year forecast is near the top end of that guidance range.

Home Depot, the nation's largest home improvement retailer, reported a better than expected gain in earnings.

After the close of trading Tuesday two tech bellwethers, Dow component Hewlett Packard (Research) and chip equipment maker Applied Materials (Research), are also due to report results, with analysts looking at earnings gains at both.

At 8:30 a.m. ET the government will release the April Produce Price Index, the measure of inflationary pressures faced by businesses at the wholesale level, as well as housing starts and building permits.

Economists surveyed by Briefing.com forecast that PPI rose 0.8 percent in April on higher energy costs, up from a 0.5 percent gain in March. The so called core PPI, which strips out volatile energy and food prices, is expected to be up 0.2 percent following a 0.1 percent rise in March.

Housing starts are forecast to stay relatively flat at a 1.95 million annual pace, compared with 1.96 million in March. Building permits, which is seen as an indicator of builder confidence in the market, is expected to fall to an annual rate of 2.04 million from 2.09 million the previous month.

Monday the National Association of Home Builders' survey of member confidence fell to its lowest level in nearly 12 years, as the index indicated a negative view of the home building market for the first time since the immediate wake of the Sept. 11 terrorist attack, while a separate report from the National Association of Realtors showed a drop in first quarter home prices compared to the end of 2005.

Oil prices remained below the $70 a barrel mark following Monday's sell-off.

The June light crude futures contract for NYMEX was down 16 cents to 69.25 in electronic trading, while the June contract for Brent crude lost 16 cents to $69.51

Major markets in Asia closed lower Tuesday, while major European markets were mixed in early trading.

Treasury prices were little changed, leaving the yield on the benchmark 10-year note at the 5.15 percent