U.S. MARKET AVERAGES
U.S. stock markets opened lower after upbeat earnings from Home Depot and better-than-anticipated retail sales in October were offset by inflation worries. Investors were awaiting Ben Bernanke’s comments on inflation and interest rates. Strength in Johnson & Johnson is supporting the Dow, keeping it near the flat line, while the Nasdaq and S&P 500 are posting modest losses.
On the economic news front, the Labor Department''s PPI rose 0.7% in October as soaring energy prices drove up manufacturers'' costs. Economists were expecting the index to be unchanged last month.
In another report the Commerce Department said a 0.1% decline in October retail sales came mostly from a continued slide in auto demand. Excluding car sales, monthly retail sales gained 0.9 percent, beating economists' forecast for a 0.3% gain.
In the first hour of trading, the Dow Jones industrial average declined 5.12, or 0.05. The Standard & Poor''s 500 index was down 2.26, or 0.18%, and the Nasdaq composite index dropped 4.67, or 0.21%.
Bonds advanced, with the yield on the 10-year Treasury note falling to 4.60% from 4.61% late Monday.
The retail sector has erased yesterday’s gains when stocks set a 3-month high on earnings from
Wal-Mart (
WMT: chart) and
Lowe''s (
LOW: chart).
Home Depot (
HD: chart) released strong Q3 earnings which initially sparked an advance, but shares of the retailer have recently reached the flat line. Meanwhile,
Jo-Ann Stores (
JAS: chart) and
American Eagle Outfitters (
AEOS: chart) are posting sharp declines after their quarterly reports.
The disk drive sector is another sharp decliner in the early going.
SanDisk (
SNDK: chart) is leading the group lower, dragged down 6.3% by a downgrade from Deutsche Securities.
Adaptec (
ADPT: chart), which announced a new CEO on Monday, is showing a loss of 1.5%.
MOVERS AND SHAKERS
The retailer
Home Depot (
HD: chart) reported third-quarter results that exceeded analyst estimates and raised its full-year profit outlook The company’s stock added 2.8%.
The department store operator
JC Penney (
JCP: chart) posted earnings from continuing operations that came above Wall Street forecast. The company attributed its strong results to an improved operating performance, lower interest expense and the positive impact of its ongoing buyback program. The company’s stock fell 1.8% on Monday.
The discount retailer
Target Corp (
TGT: chart) lowered its November sales outlook. The company said that it had been looking for a same-store sales gain of 4%-6%, but due to current trends, it now expects that sales will come in below that estmated range. The company’s shares fell 4.2%.
Standard & Poor said the online retailer
Amazon.com Inc (
AMZN: chart) will replace
AT& T Corp (
T: chart) in the S&P 500 Index. Fund managers, which track the index, have to add the company to their portfolio, which will boost demand for its shares. Amazon’s stock gained 7.1%.
ECONOMIC NEWS
Tuesday morning, the Department of Commerce released its report on
retail sales in the month of October, showing that sales fell modestly. Economists had been expecting a more significant decline.
The report showed that retail sales fell 0.1 percent in October following an upwardly revised 0.3 percent increase in September. The drop in sales was smaller than the 0.7 percent decrease that economists had expected.
Wholesale prices rose more than expected in October, according to a report from the Department of Labor, although the report also showed an unexpected decrease in core prices.
The report showed that the
Producer Price Index rose 0.7 in October following a 1.9 percent increase in September. Economists had been expecting a more modest 0.1 percent increase in prices.
The increase was partly due to a continued increase in energy prices, which rose 4.1 percent in October after surging up by 7.1 percent in September. While gas prices turned lower in October, prices for residential natural gas and home heating oil advanced at faster rates than in September.
The report also showed that core prices, which exclude food and energy prices, fell by 0.3 percent in October, reversing the 0.3 percent increase seen in September. The decrease surprised economists, who had expected another 0.3 percent increase.
INTERNATIONAL MARKET NEWS 
