NEW YORK (CNNMoney.com) -- Stock futures bounced up Tuesday after two key economic reports eased inflation fears, but suggested further cooling of the housing market.

At 9:15 a.m. ET, S&P and Nasdaq futures were higher, indicating a higher open for the major market gauges after taking fair value into account.

The government reported a surprising shortfall in the Producer Price Index, as producer prices edged up a smaller-than-expected 0.1 percent last month, versus forecasts for a 0.3 percent rise.

The more closely watched core prices, which excludes food and energy prices, posted a surprise drop of 0.4 percent, versus expectations of a 0.2 percent gain.

Wall Street also gained some insight into the strength of the housing market after the Census Bureau reported a steeper-than-expected decline in housing starts and building permits for August.

Housing starts fell 6 percent in August to 1.67 million, versus forecasts for a decline to a rate of 1.75 million.

Permits, a sign of builders' confidence in the market, fell 2.3 percent to a 1.72 million-unit annual pace, according to the Census Bureau. Economists anticipated permits to fall to a 1.74 million annual pace.

Housing start figures comes just after the National Association of Home Builders' issued a survey Monday that found confidence among builders at a 15-year low as its index posted its eighth straight decline.

Tuesday's numbers should reinforce expectations that the Federal Reserve will leaves short-term interest rates untouched when it meets again next week.

In other economic news, the National Retail Federation said early Tuesday that it expects this year's holiday sales growth to fall short of last year's increase, although it is looking for a 5 percent gain in sales, year-over-year. Still that's slower than the 6.1 percent gain posted a year ago.

Discount retailer Target (Charts) on Monday raised its September forecast, saying it now expects sales at stores open at least a year to post about a 5 percent gain, up from its earlier estimate of a 3 to 5 percent rise. Shares of Target rose 1.8 percent in after-hours trading following the new guidance.

Oil prices rallied. U.S. light crude gained 30 cents to $64.10 a barrel in electronic trading. Brent crude traded in London was 35 cents higher at $64.40.

Treasury prices turned higher, lowering the yield on the 10-year note to 4.77 percent from 4.80 percent late Monday.

Major indexes in Asia closed little changed, with Japan's Nikkei closing up 0.1 percent. Meanwhile stocks were lower in Europe in early trading.

The dollar gained against the euro but slipped versus the yen.

In corporate news, cell phone handset maker Motorola (Charts) announced it agreed to buy Symbol Technologies (Charts) for $15 a share in cash, or $3.9 billion. The purchase price represents only a 2.2 percent premium from the Monday closing price, but Symbol Technologies shares jumped 15.4 percent in trading Monday after a report of the possible deal in the Saturday edition of the Wall Street Journal.

Software provider Microsoft (Charts) announced it is launching a online-video sharing service, entering the space made popular by YouTube.

Toshiba (Charts) became the latest laptop computer maker to recall batteries made by Sony (Charts), the latest in a series of embarrassing battery problems for Sony. Dell and Apple have already recalled Sony batteries used in those companies' laptops.

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