A very good retail sales report has given futures some real fuel this morning.

The

Census Bureau

said that

retail sales fell 0.2% in April, compared with a 0.4% increase expected by economists polled by

Reuters

.

Core sales, which exclude autos, came in unchanged from March vs. expected 0.3% growth.

Meanwhile, April import prices came in down 1.6%, versus a

Reuters

estimate of a 0.3% decline, and export prices came out at a 0.1% decline, vs. a March figure of 0.4% growth.

These are all good signs that inflation may be slowing.

At 9:14 a.m. EDT, the

S&P 500 futures were up 16.7 points, about 14 points above fair value and an indication of some good buying pressure for the early going. The

Nasdaq 100

futures were up 75.5 points indicating a good rally for the open.

Suddenly the market is wondering if maybe that 50-basis point interest rate hike that everybody seemed so certain about is really in the cards. Or maybe they think if the

Fed

boss does go for a 50-point hike, that will be it for the rest of the year.

The Federal Open Market Committee meets on May 16, when it will decide on the next rate increase. It hasn't raised interest rates by more than 25 basis points in five years, but according to the Fed futures contract, usually a good indication of sentiment, a 50-basis point hike was priced into the stock market.

But no one knows for sure if this rally will hold.

"We'll have to see. There isn't any volume on the futures," said Brad Benshop, VP of CME Equities at

J.P. Morgan

. "I don't think the market will make any definitive moves until the Fed decision next week. I'm neutral ahead of the Fed," he said.

With the Nasdaq Composite Index practically matching its 3205 low for the year after Wednesday's plunge, it is not yet clear whether the technology lust will return, or if there is more downside to come. At least volume was more robust yesterday than it has been all month, which could be a sign of growing "bottom" sentiment. Most market watchers say that reaching a bottom requires a selling climax on fat volume. A little bounce right now might just lead to a hearty selloff and could take the indices lower.

Some say it won't be over until it's over, when the Federal Reserve actually decides the economy has slowed to a reasonable trot and quits the rate-boosting game.

In any case, Wall Street will continue to watch earnings today, with a couple of big ones still trickling in. But this quarter, good earnings have not always meant happy investors. After reporting strong

earnings post-close Tuesday,

Cisco

(CSCO) - Get Report

tanked yesterday, closing down 4 1/4 to 58 1/2.

Applied Materials

reported earnings

in line with estimates postclose Wednesday and was lower in early preopen trading today.

More tech big boys are scheduled to report

today, with

Dell

(DELL) - Get Report

and

Computer Associates

(CA) - Get Report

on the slate along with retailers

Gap

(GPS) - Get Report

,

Nordstrom

(JWN) - Get Report

and Kmart

(KM)

.

Meanwhile,

Microsoft

(MSFT) - Get Report

is still in the news. The company submitted a counterproposal to the government's breakup plan Wednesday, suggesting set

restrictions on its license agreements with computer makers.

The bond market was inching upward this morning, with the 10-year note up 1/32 to 100 12/32 and yielding 6.657%.

The large European bourses were bouncing on U.S. retail sales numbers. The Paris

CAC

was up 53.85 to 6317.19, while Frankfurt's

Xetra Dax

was 62.90 higher to 7183.76. Across the Channel, London's

FTSE

was up 130.4 to 6231.0.

The euro was trading up at $0.9082.

Most

Asian markets were toppled overnight by hefty Nasdaq losses yesterday, while markets in Hong Kong and Korea were closed for national holidays.

Taiwan's

TWSE

index, meanwhile, slipped 209.96, or 2.5%, to 8349.91.

Tokyo shares were steadily beaten to a pulp, and the

Nikkei

closed off 819.01 points, or 4.6%, to 16,882.46, its lowest close since Sept. 27 of last year.

The dollar edged higher against the yen in Tokyo trading to 109.79 and was lately trading at 108.75.

For a look at stocks in the news, see

Stocks to Watch, published separately.