[R]11:30AM U.S. market averages regained some ground. Retail and financial companies traded down.[/R]

U.S. stocks regained some ground in late morning trading, as investors turned to bargain hunting. However, the three major averages continued to trade below the flat line, due to significant weakness among airline, housing, and retail stocks. An increase by the price of oil also weighed on sentiment. At the same time, the higher energy prices contributed to an advance by energy stocks.

Profit warnings from retailers Sears Holding and Home Depot sent stocks lower. Sears (SHLD: chart) dropped 7%, while Home Depot (HD: chart) gained 1% on share repurchase plan. Among other retailers, Wal-Mart Stores Inc (WMT: chart) and Target Corp (TGT: chart) lost 1.7% each. D.R. Horton (DHI: chart), the largest U.S. home builder, fell 2.8% after it said quarterly orders for new homes fell 40% from a year ago and that it expects to post a loss after impairment charges.

Telecommunications stocks broadly retreated, with Alcatel-Lucent (ALU: chart), down 1.9%, Tellabs Inc. (TLAB: chart), down 1.8%, and Verizon Communications (VZ: chart), falling 1.5%. Drug stocks also declined, with shares of Noven (NOVN: chart) down 9%.

Subprime worries weighed on financial companies, with Lehman Bros falling 2.5% and Bear Stearns, down 1.6%. J.P. Morgan Chase & Co. (JPM: chart) was the biggest decliner on both the Dow and the S&P 500, falling 2.1%. Citigroup Inc (C: chart) lost 1.4%. The Dow Jones industrial average was down 65.52 points, or 0.48%, at 13,584.45. The S&P's 500 Index was down 9.85 points, or 0.64%, at 1,522.00. The Nasdaq was down 13.88 points, or 0.52%, at 2,656.14.

[R]Wholesale inventories rose 0.5% in May.[/R]

Tuesday morning, the Department of Commerce release its report on wholesale trade in the month of May, showing a notable increase in wholesale sales as well as a slightly bigger than expected increase in wholesale inventories. The report showed that wholesale sales rose 1.3 percent in May following a 1.5 percent increase in April. With the increase, wholesale sales were up 8.7 percent year-over-year. The wholesale sales growth came as a 0.5 percent drop in wholesale sales of durable goods was more than offset by a 2.9 percent increase in wholesale sales of non-durable goods. The Commerce Department also said that wholesale inventories rose 0.5 percent in May after rising 0.3 percent in the previous month. Economists had expected a 0.4 percent increase. With wholesale sales growth outpacing wholesale inventories growth, the inventories to sales ratio edged down to 1.11 in May from 1.12 in April. The ratio came in at 1.13 in May of 2006.


[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.