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Stock Futures Pare Gains After Downbeat Retail Data

NEW YORK (TheStreet) -- U.S. stock futures were paring gains Wednesday after some downbeat domestic retail sales data.

Futures for the Dow Jones Industrial Average were advancing 30 points, or 37.82 points above fair value, at 12,747. Futures for the S&P 500 were up 5.10 points, or 4.97 points above fair value, at 1376. Futures for the Nasdaq were rising 12.25 points, or 12.74 points above fair value, at 2572.

"With the majority of earnings reports in (approximately 70% better than expected) and the elections complete the equity markets are searching hard for direction and the fiscal cliff is clearly the major concern of the moment and the main driver," said Mike Boyle, senior vice president, Asset Management of Advisors Asset Management . "Given this we would look for the S&P 500 to tack between 1350 and 1430 through year-end as the fiscal cliff negotiations heat up, but we fully expect the cliff to be averted and the S&P 500 to post a double digit return for 2012 and again in 2013."

President Barack Obama is scheduled to speak at the White House Wednesday and meet with dozens of corporate executives as he works towards striking a deal on the fiscal cliff with Congress.

The Census Bureau reported Wednesday that retail sales fell 0.3% in October, more than the 0.2% decline expected by economists, after increasing by an upwardly revised 1.3% in September.

Excluding motor vehicles, retail sales were unchanged; economists had forecast an increase of 0.2%.

"October's U.S. retail sales figures suggest that consumption has lost a bit of momentum ahead of the crucial holiday shopping season," said Paul Dales, senior U.S. economist at Capital Economics. "Even after excluding sales of gasoline, autos and building materials, underlying sales fell by 0.1% [month over month] ... compares with an average rise of 0.6% [month over month]over the previous three months."

"It is hard to know how much of this is due to Hurricane Sandy (the Census Bureau said it doesn't know either) and how much may be due to a more general easing in spending growth linked to concerns over the fiscal cliff," Dales continued. "November's sales will be crucial. A bounce-back would point to a temporary Sandy-induced softening, while another soft month would suggest that the threat of a sharp fall in after-tax incomes in the new year is worrying households."

The Bureau of Labor Statistics reported that the producer price index fell 0.2% in October after advancing by 1.1% in September. Economists were expecting levels to increase 0.2%.

Excluding food and energy, the index fell 0.2% after being flat in September. Economists predicted an increase of 0.1%.

At 10 a.m., the Census Bureau is forecast to say that business inventories increased 0.5% in September after rising 0.6% in August.

At 2 p.m., the minutes from the latest two-day Fed policy meeting, which ended Oct. 24, will be released.

The FTSE 100 in London was sliding 0.45%, while the DAX in Germany was off 0.20% on Wednesday. Japan's Nikkei average settled up 0.04% and Hong Kong's Hang Seng closed higher by 1.20%.

Gold for December delivery was off $1.80 to $1,723 an ounce at the Comex division of the New York Mercantile Exchange, while December crude oil contracts were up 21 cents at $85.59.

The benchmark 10-year Treasury was down 6/32, lifting the yield to 1.618%. The dollar was down 0.05%, according to the U.S. dollar index.

In corporate news, Cisco (CSCO), the networking giant and Dow component, topped Wall Street's expectations in its latest quarter on both the top and bottom lines.

Shares were jumping more than 7% in premarket trading.

Abercrombie & Fitch (ANF) shares were soaring more than 32% after the retailer posted much better-than-expected third-quarter earnings of 87 cents a share and lifted its full-year outlook to $2.85 to $3 a share, above Wall Street expectations of $2.48 a share amid robust U.S. sales growth and strengthening demand in overseas markets.

Analysts, on average, were expecting the company to post third-quarter earnings Wednesday of 59 cents a share.

AMD (AMD) denied Tuesday that it's on the block following a report that the No. 2 chipmaker could be be up for sale.

Shares were falling close to 2%.

Staples (SPLS) posted third-quarter revenue that missed forecasts, driven by tepid sales in Europe and Australia. The office supply chain's earnings per share came in above estimates at 46 cents on revenue of $6.35 billion; analysts expected earnings of 45 cents a share in the October-ended period on revenue of $6.45 billion.

Shares were gaining more than 4.5%.

Williams-Sonoma (WSM) is expected by analysts Wednesday to post third-quarter earnings of 45 cents a share on revenue of $921.8 million.

Tyco (TYC) shares were slumping 4.5% after the fire and safety equipment maker posted quarterly earnings per share that missed the consensus by 2 cents and revenue that was in line with estimates.

Papa John's (PZZA) is facing a $250 million class-action lawsuit relating to the pizza chain's alleged involvement with excessive text messaging.

-- Written by Andrea Tse in New York.



>To contact the writer of this article, click here: Andrea Tse.

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