Some hope on the horizon for stocks

NEW YORK (CNNMoney.com) -- Stock pointed to a higher open Tuesday following a tame inflation reading at the wholesale level, despite profit warnings from Wal-Mart and Home Depot, two of the nation's largest retailers.

At 9 a.m. ET, Nasdaq and S&P futures were modestly higher when compared to fair value.

Wholesale inflation rose by a greater-than-expected 0.6 percent in July, the Labor Department reported. But the key core reading, which strips out volatile food and energy prices, climbed just 0.1 percent, falling short of expectations.

Economists surveyed by Briefing.com anticipated a 0.2 percent increase.

Futures initially fell sharply after Wal-Mart Stores (Charts, Fortune 500) lowered its earnings guidance going forward, and Home Depot (Charts, Fortune 500) warned it believes the housing and home improvement markets will remain soft into 2008.

The retailers' earnings reports weren't all bad. Wal-Mart earnings rose and met forecasts for the just completed second quarter, while Home Depot's earnings excluding special items fell less than expectations.

But shares of Wal-Mart were off 5.4 percent in pre-market trading following the report. The two retailers are both components of the Dow Jones industrial average.

Stocks endured another rough day Monday as a rally ran out of steam late in the day and ended the session slightly lower.

In other economic news, the trade gap narrowed unexpectedly in June, helped by strong exports even in the face of higher oil prices.

The trade gap with China is likely to get attention, particularly as toymaker Mattel (Charts, Fortune 500) is set to announce a second recall of Chinese-made toys, according to published reports. The toymaker recalled more than a million toys manufactured in China less than two weeks ago.

Stocks in Europe were mixed after Swiss bank UBS (Charts) warned that if market turbulence persists, its investment banking business would likely be hurt. A report that showed a weaker than expected 2.5 percent year-over-year growth in the economies of the 13-nation eurozone also hit stocks there. Markets in Asia also eased after rebounding the previous session.

In other corporate news, Dutch life insurer Aegon (Charts) said late Monday it will buy two life insurance units of Wall Street firm Merrill Lynch (Charts, Fortune 500) for $1.3 billion in cash.

Treasury prices fell following the PPI report, taking the yield on the 10-year note to 4.81 percent from the 4.76 percent level reached late Monday. The dollar was higher against the euro and the yen in early trading.

Oil prices rose in early trading, as the price of U.S. light crude gained 50 cents to $72.12 a barrel in electronic trading.