Wall Street slated for weak open

NEW YORK (CNNMoney.com) -- U.S. stocks were set for a lackluster open Tuesday, as investor sentiment suffered a blow from dismal housing reports.

At 8:50 a.m. ET, Dow Jones industrial average, Standard & Poor's 500 and Nasdaq 100 futures were lower, losing their earlier gains after disappointing reports on housing starts and building permits.

Futures measure current index values against perceived future performance and offer an indication of how markets may open when trading begins on Wall Street.

Manus Cranny, market analyst at MF Global in London, said the pre-market reports on the housing market will have a major impact on Tuesday trading.

"At our peril, should they disappoint," he said, before the reports came out and confirmed his fears.

Stocks soared Monday as investors took an more upbeat view on the economy. The Dow, S&P 500 and Nasdaq all gained about 3%, driven by an upbeat outlook from Lowe's (LOW, Fortune 500), and Goldman Sachs' (GS, Fortune 500) upgrade of Bank of America (BAC, Fortune 500).

Economy: The Commerce Department reported declines in April for housing starts and building permits.

Building permits fell 3% to an annually adjusted rate of 494,000 in April, from the revised rate of 511,000 in March. That is 50% below the year-ago rate of 991,000, and significantly below Briefing.com's expectations of a rise to 530,000.

Housing starts in April dropped nearly 13% to the seasonally adjusted annual rate of 458,000, from the revised March rate of 525,000. This is down 54% from the year-ago rate of 1 million.

Housing starts were expected to increase to 527,000 units in April, according to Briefing.com consensus.

Companies: Home improvement retailer Home Depot (HP) reported quarterly earnings that beat expectations. The company posted operating income of 35 cents per share, while a consensus of analyst forecasts from Thomson Reuters had expected 29 cents.

Credit card company American Express (AXP, Fortune 500) said late Monday that it would slash 4,000 jobs, or about 6% of its global workforce.

On the tech front, Hewlett-Packard (HPQ, Fortune 500) is due to post results after U.S. markets close.

Autos: Later Tuesday, President Obama is due to announce stricter fuel economy standards aimed at cutting down vehicle greenhouse gas emissions.

World markets: Stocks in Japan rallied, with the benchmark Nikkei gaining nearly 3%. In morning trading, major European exchanges were higher.

Money and oil: The dollar fell versus major international currencies, including the euro, the British pound and the yen. The price of oil rose 50 cents a barrel to $59.53.