U.S. MARKET AVERAGES

U.S. stocks have traded in a lackluster fashion on economic data, a sales warning from discount retailer Target, upbeat earnings from Home Depot and a 3.8% gain in Johnson & Johnson shares, after the company renegotiated a lower takeover price for device maker Guidant Corp. Upbeat October data from the government on producer prices and retail sales, as well as testimony from Fed Chairman nominee Ben Bernanke had a positive effect on markets.

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 percent gain.

Energy stocks have been advancing on higher oil prices, currently over $58 a barrel. The oil service and natural gas spaces are now showing gains of about 2.2% with Noble (NE: chart) helping to push the oil service group higher, climbing by about 3%.

The Dow Jones Transportation Average is showing a modest decline on profit-taking. The broker/dealer space is sitting just below the unchanged mark. The insurance space is also showing a modest retreat. After coming off a high during Monday''s session, the bank sector is sitting modestly below the flat line.

Johnson & Johnson (JNJ: chart) is the best performing Dow component on news that it has revised the price to acquire Guidant (GDT: chart). Shares of the company, which lowered its purchase price for the medical device maker from $76 to $63.08 per share, are currently up 3.6%. Hewlett-Packard (HPQ: chart) and IBM (IBM: chart) are posting gains of more than 1%.

GM (GM: chart) is the worst performing Dow component. The stock is moving to the downside, down 1.7%, on news that it is once again implementing significant incentives to sell cars. Pfizer (PFE: chart) is another drag of the Dow, falling by 1.3% after a study showed that a high dose of Lipitor had no advantage compared to a normal dose of Merck''s (MRK: chart) Zocor.

Among the most notable gainers in morning session, AMD (AMD: chart) has ticked above resistance to reach a new 52-week high. Agilent (A: chart) has set a fresh peak as well, rising over 5% on its earnings news. Apple (AAPL: chart) has also established a new high.

Among the biggest decliners, Vodafone (VOD: chart) has fallen to a new 52-week low on earnings news. Blockbuster (BBI: chart) has reached a fresh low. Jo-Ann Stores (JAS: chart) is down 20% on a quarterly results.

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.