Stocks may ring up gains on retail sales

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NEW YORK (CNNMoney) -- U.S. stock futures edged higher Wednesday as investors were cheered by a stronger than expected retail sales report which lessened recession fears.

Nasdaq and S&P futures were trending higher, indicating a higher opening for Wall Street even before the report, but they got a bump on the report.

Retail sales posted a 0.3% rise in January, far better than forecast of a 0.3% decline, as well as the the 0.4% drop in December, which raised alarms about a recession due to a slowdown in consumer spending.

Excluding autos, sales were also up 0.3%, which was a bit better than the forecast of a 0.2% rise and much better than the 0.4% fall of that measure in December.

The reading seemed to contrast earlier reports from major retailers that showed very weak performance in January, as sales at stores open at least a year, a closely watched measure known as same-store sales, was the weakest in five years. Wal-Mart Stores (WMT, Fortune 500), the largest retailer, missed forecasts and warned consumers were using gift cards for food and other essentials rather than discretionary purchases.

Peter Cardillo, chief market economist for Avalon Partners, said the gain in sales should be a major lift for the markets Wednesday.

"I think the market can tack on the gains of yesterday," he said. "This market is really trying to put in a bottom and I think that it would love to respond to the Fed rate cuts we've already had. There have been fears out there of a consumer-led recession. This would appear to answer those worries."

Blue chips rallied Tuesday after Warren Buffett reached out to ailing bond insurers and major lenders announced a plan aimed at helping homeowners avoid foreclosure.

In corporate news, Applied Materials (AMAT, Fortune 500), the leading maker of equipment used by chipmakers, posted lower earnings that still beat forecasts. Its shares gained nearly 5% in after-hours tarding.

Dow component Coca-Cola (KO, Fortune 500) posted improved earnings on strong global sales, allowing it to top forecasts. Shares of Coke gained just more than 1% in pre-market trading on the news.

The Wall Street Journal reported that Delta Air Lines (DAL, Fortune 500) CEO Officer Richard Anderson told the airline's board that he will waive millions of dollars in compensation to which he would be entitled in the event of a merger. That is seen as a positive sign for merger discussions between Delta and possible partners, primarily Northwest Airlines.

But in other merger news, the paper reported that Google (GOOG, Fortune 500) is no longer as eager to enter a potential advertising tie-up that could help rival Yahoo (YHOO, Fortune 500) try to thwart a possible hostile bid from Microsoft (MSFT, Fortune 500).

Asian markets were mixed Wednesday, with Tokyo stocks ending higher.

March crude oil futures declined ahead of the 10:30 a.m. ET report on U.S. fuel inventories. A barrel of light sweet crude lost 7 cents to $92.71 in electronic trading, after the contract ended 81 cents lower at $92.78 a barrel in regular trading on the New York Mercantile Exchange.

In currency trading, the dollar fell 0.2% to ¥107.05.