(Updated from 7:09 a.m. EDT)

Are investors going to see the market rally today?

That's what we'll find out when the

Producer Price Index

(

definition |

chart |

source

) and

retail sales

(

definition |

chart |

source

) reports are released at 8:30 a.m. EDT. The core PPI, which excludes food and energy prices, is expected to rise 0.1%.

These key economic data will provide clues about whether the

Federal Reserve will raise interest rates. If the wholesale and retail sales indicators show that the economy is continuing to slow down a bit, fears of higher interest rates will be allayed and the market will likely see its gains continue.

In anticipation of this morning's reports, the

S&P 500 futures on

Globex

were up 1.5 to 1511, about a half point above

fair value as calculated by

Prudential Securities

, and suggesting little about the opening.

This week's strong second-quarter earnings for tech companies, including

Yahoo!

(YHOO)

and

Ariba

(ARBA)

, have encouraged investors to embrace technology stocks once again. In early action, the thinly traded

Nasdaq 100

futures were up 6.5 to 4015, about 11 points above fair value as calculated by

TheStreet.com

, and indicating a modest bounce at the opening for the

Nasdaq Composite.

After midsession trading, Germany's

Xetra Dax

was up 2%. France's

CAC 40

was ahead 0.5%, while the U.K.'s

FTSE 100

improved 0.3% (see today's

European Midday Update for more). Japan's

Nikkei 225

rose 0.6% overnight, while Hong Kong's

Hang Seng

declined 0.8% (see today's

Asian Markets Update for more).

Earlier: Tech Strength Continues Overseas

LONDON -- European investors continued to pile out of industries such as pharmaceuticals to buy technology shares Friday morning in a continuation of yesterday's action.

Some of Thursday's biggest gainers remained strong this morning in Germany, including

Ariba

(ARBA)

, which gained 6.60 euros, or 5%, to 138.60 euros ($129.79), and

Rational Software

(RATL)

, which jumped 6.50 euros, or 5.8%, to 119 euros. (Like most U.S. stocks, these companies are also listed on some foreign exchanges.)

Not all traders believe the early strength will hold throughout the day. "I wouldn't be surprised if the techs give back some of their gains as they've had quite a run," said one London trader, who asked not to be named.

Meanwhile, sectors that took a beating yesterday, like drugs, continued to suffer more neglect on Friday. Shares of

Merck

(MRK) - Get Report

declined 80 European cents, or 1.1%, to 73.20 euros, while

Eli Lilly

(LLY) - Get Report

was off 40 European cents, or 0.4%, to 102.10 euros.

In general, however, traders were hesitant Friday ahead of the U.S.

Producer Price Index

for June, due to be released at 8:30 a.m. EDT. Consensus calls for a 0.5% rise. Should the number come in higher, "it could make the market jittery as the inflation specter is always in the background," the trader said.

Also released at 8:30 a.m. EDT will be

retail sales

for June, for which analysts are expecting a 0.4% rise.

At 7 a.m. EDT, the September

S&P 500 futures were up 1.6 points to 1511.1, or 0.76 points above

fair value as calculated by

Prudential Securities

, which is little indication for the open. The thinly traded

Nasdaq 100

futures were up 6.5 to 4015, or 11.17 points above fair value as calculated by

TheStreet.com

, indicating a slightly bullish open for large-cap tech stocks in the early going. Fair value helps determine the tone of futures trading, often a good indication for how the securities market will open.