U.S. stock futures rose early Tuesday as the Street awaited earnings from Goldman Sachs that has tended to beat analyst estimates in the past. In light of the turmoil in financials, this would be a welcome treat. Also this morning, several economic reports are due about inflation, housing and industrial production. Given the Federal Reserve meeting next week, investors will keep a close watch on the inflation data.On Monday, U.S. stocks ended mixed as investors continued to worry about the economy and watch oil carefully. Downgrades of several Dow industrials stocks such as Verizon, AT&T and GE, caused the index to finish the day 38 points, or 0.31%, lower while the S&P 500 ended up a fraction of a point, or 0.01%, and Nasdaq Composite added 20 points, or 0.83%, getting a boost from possible approval of satellite radio merger.
A busy morning full of economic readings is ahead of us:
At 8:30 a.m. EDT, May building permits and housing starts figures will be released. The recent declining trend is not expected to reverse course yet, despite some recent indication the housing market may begin to show a bottom. Both figures are estimated to drop further.
At the same time, a measure of inflation with prices at the wholesale level will be reported. May Producer Price Index is expected to rise 1%, while core PPI is expected to show an increase of 0.2% in May.
Then, at 9:15, May capacity utilization and industrial production numbers are also due out with the latter actually expected to show a slight growth in May.
These will all be material for the Federal Reserve decision next week. And while many are anticipating a rate hike, or a series of hikes starting in August, and have already priced these in, both the Wall Street Journal and the Financial Times this morning report that the Fed "mood" doesn't support a rate hike in August, and that the market has been overaggressive with its expectations of how soon and how many hikes the Fed will use to curb inflation. No doubt these reports have contributed to this morning's more bullish sentiment.
And naturally that with such high oil prices, inflation could become a global problem. In fact, U.K. inflation reached the highest since at least 1997 in May, with some officials predicting it will exceed 4% later this year and the U.K. economy will fall into a recession.
Meanwhile, oil eased some overnight and the dollar slipped against major currencies.
In corporate news, Goldman Sachs (NYSE: GS), which so far has avoided big losses from the subprime mortgage crisis and credit crunch, is due to report. But even Goldman may not be immune as it had a considerable amount of mortgage backed loans and securities, and so investors await to hear the results.
Goldman Sachs also said it is close to finalizing a plan to restructure a $7 billion SIVs.
Why do we have a weak dollar?
Holiday hiring slow for retailers
Closing Bell: What sell-off? (AIG, ABK, EPR, MBI, JAVA, ORCL, ERTS)
