[R]11:30AM Stocks turned in a lackluster trading.[/R]
U.S. stocks turned in a choppy trading session with investors digesting three key economic reports. The major equity indices turned mixed in late morning trading, with the Dow posting a modest gain, while the Nasdaq and the S&P 500 slipped into negative territory. The Labor Department report helped to ease inflation concerns, saying that April wholesale prices increased 0.9% due to a sharp rise in energy prices and core producer prices rose by 0.1%. In a separate report, the Commerce Department showed a bigger-than-expected drop in housing starts which raised concerns about the strength of the housing market. Additionally, a report from the Federal Reserve showed that industrial production rose by 0.8% in April, above the expected growth of about 0.5%.

The weaker-than-expected housing data contributed to some weakness among housing stocks. The Philadelphia Housing Sector Index fell 1.1%. Airline stocks showed significant weakness on profit taking, with the Amex Airline Index falling 1.6%. Commodities stocks reversed from some early strength. Energy stocks moved lower, following a decline by the price of oil, while gold stocks turned lower even, despite the higher price of the precious metal. At the same time, health insurance stocks posted considerable gains, sending the Morgan Stanley Healthcare Payor Index up 2.8%. Pharmaceutical stocks also advanced.In late morning trading, the Dow Jones industrial average added 8.73, or 0.08%. The Standard & Poor's 500 index was down 0.94, or 0.07%, and the Nasdaq composite index fell 5.99, or 0.27%. The 10-year Treasury note dropped to 5.12% from 5.16% late Monday.


[R]10:30AM The Indian Sensex back on the winning track.[/R]
Sensex in India advanced 51.53 points, or 0.55% to close at 11,873.73. The turnover on the BSE was Rs 5,229 crore today, up from Monday’s Rs 5,128 crore. The trading session witnessed high volatility as the Sensex fluctuated 1,800 points experiencing various highs and lows on the day. Sensex fluctuated 576 points between the low 11,379 and high 11,955 for the day. Cement stocks led the gainers. UltraTech Cement surged 10% to Rs 751.85, Gujarat Ambuja Cements advanced 8% to Rs 109.35, ACC added 5% up to Rs 905 and Grasim increased 3.7% to Rs 2,205. Among other advancing stocks were Reliance Industries rose 3% to Rs 1,052 on a high volume of 4.6 million shares, traded in the session. Infosys (INFY: chart) advanced 0.4% to Rs 3,170 and Hindalco gained 1.8% to Rs 214 amid high volatility in the wake of the company’s decision to lift aluminium prices by Rs 10,000 per tonne immediately.

Automotive stocks also gained. Bajaj Auto gained 2.3% to Rs 3,109, Mahindra & Mahindra advanced 1.9% to Rs 681 and Tata Motors (TTM: chart) shares were up 1% to Rs 929. Energy shares jumped on the bandwagon too. Public sector power equipment company Bharat Heavy Electric (BHEL) rose 3.3% to Rs 2,330 and power-generation company, NTPC, advanced 2.4% to Rs 132. Wipro Limited (WIT: chart) also reported to be in a deal to acquire computer graphic company, Quantech Global Services, located in the U.S. and in India with a staff of 500 engineers in India. Quatech provides computer aided design services to companies in automotive and manufacturing industries. Quantech generated $12.7 million in revenue in 2005. The terms of deal were not disclosed.


[R]10:00AM Stocks opened slightly higher on tame inflation data.[/R]
Stocks opened slightly higher on rebounding commodity prices and easing inflation concerns after the Labor Department showed that core wholesale prices rose less than expected in April. Buying interest remained somewhat subdued, limiting the upside for the major averages. In the first hour of trading, the Dow Jones industrial average added 23.14, or 0.2%. The Standard & Poor''s 500 index was up 2.22, or 0.17%, and the Nasdaq composite index rose 3.61, or 0.16%. The yield on the 10-year Treasury note dropped to 5.13% from 5.16% Monday.

After some weakness in the opening hours, gold stocks moved back to the upside along with the price of the precious metal. Energy stocks also moved to the upside, as the rising price of oil inspired some bargain hunting. In earnings news, Home Depot Inc. (HD: chart) posted 19% profit rise in Q1, although its sales came in below estimates. Home Depot fell $1.22 to $39.28. Wal-Mart Stores Inc. (WMT: chart) posted 6%t rise in quarterly income, beating analysts'' target by 2 cents per share. Its sales rose 12%to match expectations. Wal-Mart was unchanged at $47.43.


[R]Industrial production grew by 0.8% in April.[/R]
Tuesday morning, the Federal Reserve released its report on industrial production and capacity utilization in the month of April. The report showed that production grew more than economists had been expecting. The Fed said that industrial production rose by 0.8 percent in April after growing 0.6 percent in March. Economists had been expecting more modest production growth of about 0.5 percent. The report showed that the increase in industrial production came as manufacturing production grew by 0.7 percent in April after increasing by 0.5 percent in March. Output for mining and for utilities both increased 0.9 percent. The Fed added that the capacity utilization rate rose to 81.9 percent in April from 81.4 percent in March. The increase came in above economist expectations of an increase to 81.6 percent.

[R]New houses construction fell more than expected.[/R]
The Department of Commerce released its report on housing starts in the month of April on Tuesday, showing that starts fell more than economists had expected. The report also showed a notable decline in building permits. The report said that housing starts fell 7.4 percent to a seasonally adjusted annual rate of 1.849 million units in April from a revised 1.996 million unit rate in March. Economists expected starts to fall to a 1.95 million unit rate from the 1.96 million unit rate originally reported for March. The drop in housing starts came as decreases in the South and West more than offset increases in the North and Midwest. The report also showed that building permits fell 5.4 percent to a seasonally adjusted annual rate of 1.984 million units in April from a 2.097 million unit rate in March. Building permits are seen as an indicator of future demand.

[R]Producer prices rose above expectations.[/R]
Tuesday morning, the Labor Department released its closely watched report on wholesale prices in the month of April. The report showed that prices rose more than expected amid a notable increase in energy prices. The Labor Department said that its producer price index rose 0.9 percent in April following a 0.5 percent increase in March. Economists had expected the index to increase by a slightly more modest 0.8 percent. The increase was largely due to a notable increase in energy prices, which rose 4.0 percent in April after rising 1.8 percent in March. The higher energy prices reflected a rebound by home heating oil prices as well as a faster rate of growth in gasoline and kerosene prices. The report also showed that core prices, which exclude food and energy prices, edged up by 0.1 percent in April, matching the increase seen in March. The increase came in slightly below economist estimates of an increase of 0.2 percent. The modest increase in core prices may help to ease recent concerns about inflation, although some traders are likely to remain worried about the prospect of higher energy prices being passed on in the costs of other goods.


[R] 9:00AM Stock futures were set to open flat ahead of inflation data.[/R]
U.S. stock futures were sitting near the flat line as investors awaited producer prices data, expected to show an increase in last-month inflation that could influence interest rates. Economists expect 0.8% pick-up in PPI, while core PPI, which excludes food and energy costs, is forecast to rise 0.2%.

In earnings news, Wal-Mart Stores Inc. (WMT: chart) reported quarterly earnings above analyst estimates. The world’s biggest retailer said that its Q1 profit rose 6.3% which equals to $2.615 billion, or 63 cents per share, up from $2.461 billion, or 58 cents a year ago, beating estimates of 61 cents. Its overall revenue rose to $80.47 billion from $71.68 billion a year ago. Wal-Mart reported same-store sales rose 3.8% in the first quarter. Home Depot Inc. (HD: chart) gained 1% in pre-market trading on better-than-expected quarterly earnings. The world''s largest home improvement retailer said its Q1 profit rose 19% to $1.48 billion, or 70 cents a share, compared with a profit of $1.25 billion, or 57 cents a share, for the same period a year ago. Analysts had predicted earnings of 67 cents a share. Office supply retailer Staples Inc. (SPLS: chart) and teen apparel retailer American Eagle Outfitters Inc. (AEOS: chart) both reported higher earnings. S&P 500 futures were down 0.4 point, slightly below fair value.Dow Jones industrial average futures fell 4 points, and Nasdaq 100 futures rose 1 point.

American Eagle Outfitters Inc., (AEOS: chart), casual apparel retailer, reported Q1 earnings of 42 cents a share, up from a profit of 35 cents a share a year-ago. Q1 includes 2 cents a share in stock option expensing. Sales advanced 14% in Q1 to $522.4 million from $456.5 million in the same period a year ago. Same-store sales rose 9%. The company beat average analysts’ estimate by a penny.

Dick''s Sporting Goods Inc, (DKS: chart), specialty retailer, reported Q1 earnings of 21 cents a share, up from a pro forma profit of 16 cents a share a year-ago. The year-ago pro forma results are connected with 6 cents a share for stock option expensing as if the company expensed stock options then and excludes merger integration and store closing costs. Sales advanced 13% and same-store sales rose 6.5% in the quarter. The company topped analysts’ estimate for a profit of 17 cents a share.

Saks Inc, (SKS: chart), department store operator, reported Q1 earnings of 60 cents a share, up from a profit of 11 cents a share a year-ago. Q1 includes a net after-tax gain of 52 cents a share, primarily connected with the sale of its SDSG Northern Department Store Group assets, among other items. The year-earlier results include a net after-tax gain of a penny a share, mainly from the sale of assets related to certain Saks Fifth Avenue Enterprises stores. Sales dropped in Q1 to $1.04 billion from $1.55 billion in the same period a year ago. The average analysts’ forecasts were for a profit of 9 cents a share.

BJ''s Wholesale Club Inc, (BJ: chart), warehouse club retailer, reported that Q1 income dropped to 23 cents a share, from 27 cents a year earlier. If not for items, the company would have reported earnings of 24 cents a share. Revenue rose to $1.92 billion from $1.81 billion, while same-store sales advanced 2%. The company topped analysts’ views for earnings of 19 cents a share.

Staples Inc, (SPLS: chart), office products retailer, reported Q1 earnings of 25 cents a share, up from a profit of 20 cents a share a year-ago. The company sales advanced 9% in Q1 to $4.24 billion from $3.9 billion in the same period a year ago. The company topped analysts’ expectations for a profit of 23 cents a share. in the April period. The company said North American Retail same-store sales advanced 1% higher as a weaker performance in furniture and technology offset positive customer traffic and strong comps in core supplies categories and copy and print services.