Stock futures sink on inflation fears
Bigger-than-expected consumer inflation reading spooks investors, erasing boost provided by Wal-Mart results.
NEW YORK (CNNMoney.com) -- Stocks futures turned lower Thursday as a sharp increase in consumer inflation outweighed a big earnings report by the retail giant Wal-Mart.
Less than an hour before the start of trading, Nasdaq and S&P futures were lower, pointing to a decline at the open.
Stocks have slumped for the past two sessions, weighed by credit fears and concerns about the weakening economy.
Inflation: Consumer prices surged more than expect during the month of July, the Labor Department reported in its Consumer Price Index.
The index, a key measure of inflation, rose 0.8% in July, more than twice what economists were anticipating, versus a 1.1% gain the previous month. The so-called core CPI, which excludes the volatile food and energy prices, increased 0.3% in July on a monthly basis. Analysts had expected an increase of 0.2%.
The annual rate climbed to 5.6%, hitting its highest level since 1991.
In other economic news, jobless claims slipped to 450,000 in the most recent week.
Wal-Mart: Futures initially got a boost after Wal-Mart (WMT, Fortune 500), the world's largest retailer, reported a 17% jump in second-quarter profit which beat earnings predictions.
The company reported a profit of $3.4 billion, or 87 cents a share. Analysts polled by Thomson Reuters expected profit of 84 cents a share. Revenue rose 10% to $101.6 billion, a shade below Wall Street's estimates.
The company also boosted its full-year earnings forecast to between $3.43 and $3.50 a share.
Retailers have been hit by a slowdown in consumer spending, but discounters like Wal-Mart have benefited as shoppers have become more price conscious. The government reported Wednesday that overall retail sales fell 0.1% last month.
Oil: Crude futures, which jumped about $3 the previous session, extended their gains in electronic trading.
Oil prices were supported by a U.S. government inventory report Wednesday that showed a bigger-than-expected drop in gas supplies.
U.S. crude for September delivery eased 30 cents to $115.70 a barrel in electronic trading on the New York Mercantile Exchange.
Booksellers: In other company news, Barnes & Noble Inc. (BKS, Fortune 500) would probably not attempt to acquire rival Borders Group Inc. (BGP), according to a Wall Street Journal report.
The news would likely disappoint some investors who had purchased Borders stock on hopes of a buyout.
World markets: Stocks in Asia finished mostly higher and European markets rose in midday trading. 
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