Stock futures lift, but still flat, on retail sales

NEW YORK (CNNMoney.com) -- U.S. stocks were poised for a tentative open Tuesday, as traders pulled out of their slump on better-than-expected retail sales data before the opening bell.

Dow Jones industrial average (INDU), S&P 500 (SPX) and Nasdaq (COMP) futures were flat ahead of the opening bell, an improvement from earlier trading. Futures measure current index values against perceived future performance.

Stocks rallied Monday, after the release of new global banking rules, upbeat economic data from China, and some acquisition activity helped boost investor sentiment.

The economy remains the main driver behind stocks and traders took confidence ahead of the opening bell Tuesday as they reacted to the headline number of the day -- retail sales.

U.S. retail sales rose 0.4% in August, or a gain of 0.6% excluding auto sales. This slightly outpaced expectations of economists, who forecast U.S. retail sales to have risen 0.3% last month, according to consensus estimates from Briefing.com. Retail sales, excluding the auto sector, were forecast to have edged up 0.3%, versus a 0.2% gain in the prior month.

With the number meeting the 0.4% gain retail sales saw in July, it could fuel a rally at the market's open, said Peter Cardillo, chief market economist with Avalon Partners.

"Retail sales will give us an insight of what the consumer may or may not do going forward," he said. "While the consumer remains frugal out there, he's still spending. If we get better than expected data, we could see a jump in future sales and that goes hand in hand with consumer confidence."

Investors are starting to transition from an "overly pessimistic" to "cautiously optimistic" view about the recovery, Cardillo said, and higher retail sales would make the outlook look more 'glass-is-half-full' rather than empty.

Economy: After the opening bell, another government report is expected to show that business inventories rose 0.7% in July, after a 0.2% increase in June.

Companies: Electronics retailer Best Buy (BBY, Fortune 500) stock surged 7% in pre-market trading as it reported earnings that beat expectations and raised their outlook.

The company reported earnings of 60 cents per diluted share and revenue of $11.3 billion, compared to Thomson Reuters' analyst consensus of 44 cents EPS and $11.5 billion revenue. The retailer raised its diluted EPS guidance for 2011 to $3.70 from $3.55.

World markets: Struggling to find direction throughout the trading session, European shares hovered around flat. The CAC 40 in France and Germany's DAX both fell 0.1%, and Britain's FTSE 100 was slightly lower.

Asian markets ended mixed. Japan's benchmark Nikkei index fell 0.2% and the Hang Seng in Hong Kong rose 0.2%. The Shanghai Composite ended flat.

Currencies and commodities: The dollar edged up against the euro and the British pound, but slipped versus the yen.

Earlier in Asian trading, the dollar hit a fresh 15-year low against the yen, reportedly prompting the Japanese government to say it may take steps to curb the currency's strength amid growing concerns about the pace of the recovery.

Oil futures for October delivery fell 13 cents to $77.06 a barrel. Gold for December delivery rose $13.40 to $1,260.50 an ounce.

Bonds: The yield on the 10-year Treasury note fell to 2.71% from 2.76% late Monday.