[R]9:45AM Wall Street opened in the negative ahead if Fed Reserve Chairman’s speech.[/R]

Wall Street opened lower on Tuesday amid unimpressive start of Q2 earnings season given by Alcoa's earnings and slashed profit outlooks at Home Depot and Sears. Investors were also cautious ahead of speech by Federal Reserve Chairman Ben Bernanke on housing and inflation. In economic news, the Commerce Department said that May wholesale inventories rose 0.5%, higher than expected and higher than April's 0.3% advance.

Dow component Home Depot (HD: chart) rose 1.3% although it cut its full-year earnings forecast, due to sluggish housing market. The company launched a tender offer for 250 million of its shares. At the same time, Sears (SHLD: chart) dropped 7% after warning that Q2 profit will decline, due to weaker sales. Among companies posting positive results, Pepsi Bottling Group (PEP: chart) rose 4% after it raised its outlook for full-year earnings and said Q2 profit rose 9.5% to 70 cents a share, beating estimates.

The Dow was dragged down by its financial shares, with JP Morgan Chase (JPM: chart), falling 2%, American Express Co. (AXP: chart) and Citigroup Inc. (C: chart), both losing over 1%. General Motors (GM: chart) bucked the downward trend, rising 1.5% on a new upgrade from J.P. Morgan.

In the first minutes of trading, the Dow Jones industrial average fell 46.82, or 0.34, to 13,603.15. The Standard & Poor's 500 index was down 8.48, or 0.55%, at 1,523.37, while the Nasdaq composite index was off 13.83, or 0.52%, at 2,656.19.


[R]9:30AM London is sharply lower with miners down, while retailers are higher led by Marks & Spencer.[/R]

In London, leading stocks plunged with miners Xstrata and BHP Billiton lower as recent gains give way to profit taking. Carnival and British Airways are also lower as oil prices remain around $72 a barrel and the IEA predicted an energy crunch at the start of the next decade. On the plus side, retailer Marks & Spencer lifted the sector as investors expressed relief at better than anticipated first quarter figures following poor weather in June.

Advancers of the Day

Retailers were in focus after Marks & Spencer cheered investors with an upbeat trading statement. The retailer reported a 2% rise in first quarter. The company firmed 2.7%.

Next tracked the strong performance of Marks & Spencer, trading 1.9% higher, while Debenhams and Mothercare both gained 1.1%.

Consumer goods company Unilever was higher 3.8% on bid speculation.

Decliners of the Day

BHP Billiton lost 3.1% as reports circulate that the biggest miner is in talks with private equity firms to team up for a possible $40 billion bid for US aluminium company Alcoa. Antofagasta lost 1.6% and Anglo American shed 1.4%.

Carnival, the biggest cruise operator in the world, fell 2.9% on continued strength in crude oil prices. British Airways were also hit, down 1.9%.

Wolseley retreated 2% after US Home Depot reduced its 2007 earnings outlook.


[R]9:00AM U.S. stock futures pointed lower, as reduced profit outlooks from Home Depot and Sears weighed.[/R]

U.S. stock futures pointed to a lower opening Tuesday, reflecting unimpressive start to Q2 earnings season and worries about corporate earnings, due to lowered profit outlooks from two retail companies. Renewed housing and inflation concerns ahead of a speech from Fed Reserve Chairman Ben Bernanke also weighed. The market also awaited the Commerce Department report on wholesale inventories, expected to show a 0.4% increase.

Aluminum giant Alcoa (AA: chart) added 0.7% in the pre-open after posting in-line-with-estimate 4% profit decline. However, quarterly revenue missed the average analyst forecast Dow member Home Depot (HD: chart) warned that 2007 earnings will fall more than expected, blaming the slowing housing market. Shares of the home improvement retailer added 1% in pre-market trading.