Stock futures rise after Wal-Mart, Home Depot profits

NEW YORK (Reuters) - Stock index futures rose on Tuesday after bellwether retailers Wal-Mart and Home Depot posted-better-than expected quarterly profits, but Wal-Mart cautioned about the strength of the U.S. consumer.

Wal-Mart Stores Inc the world's largest retailer, said cost controls and international markets helped profits, but sales at U.S. stores fell for the fifth consecutive quarter as company warned that the U.S. consumer remained under pressure. The shares rose 0.7 percent to $50.75 in premarket trading.

Home Depot Inc , the top home improvement chain, said profit topped estimates, also helped by cost controls, but sales missed expectations. The shares gained 1.2 percent to $27.70 premarket.

Peter Cardillo, chief market economist at Avalon Partners, said signs of life from retailers were a relief to investors worried that consumer spending, the engine of the U.S. economy, may start to falter. "Any clues that suggest that consumer spending is not about to turn negative is a plus," he said.

S&P 500 futures rose 6.5 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures rose 46 points, and Nasdaq 100 futures added 10.5 points.

Stocks fell sharply last week amid fears of a slowdown in the economy. Although Wall Street finished flat on Monday, many analysts said the trend is for stocks to likely remain lower on concerns about the economy.

Abercrombie & Fitch Co also topped estimates as its quarterly profit was helped by discounts that lifted sales. The retailer earned $19.5 million, or 22 cents per share.

On the data front, the Producer Price Index and a report on housing starts and permits for July are due at 8:30 a.m. EDT, while the Federal Reserve's industrial production and capacity utilization report for July is due at 9:15 a.m.

Also coming at 8:30 a.m. EDT is a report on housing starts. Economists expected 560,000 in July versus 549,000 in the previous month.

Producer prices are expected to have risen 0.2 percent in July after declining 0.5 percent the month before, helping to allay fears about deflation. Industrial production is seen up 0.5 percent in July compared to 0.1 percent the prior month.

Crude oil futures were up 1 percent, rising from a one-month low as a weaker dollar edged out concerns about the pace of global economic recovery and U.S. petroleum inventory data.

Japan's Nikkei average fell 0.4 percent to its lowest close in more than eight months, with the yen holding on to gains against the dollar as signs of weak economic growth dampened appetite for risk. European stocks rose 0.7 percent, led by miners that found support in steady metal prices.

(Reporting by Edward Krudy; editing by Jeffrey Benkoe)