By Ellis Mnyandu
NEW YORK (Reuters) - Stocks headed for a lower open on Tuesday as investors worried that mounting price pressures may hinder the U.S. Federal Reserve from slashing interest rates further to revive a sputtering economy.
A report showing that January U.S. producer prices had their biggest 12-month gain in more than 26 years dealt a blow to investors' hopes that further rate reductions would help the U.S. economy avert a recession.
"This means we are in a lot of trouble. The number was much much worse than expected. It is so evident that inflation is a big deal, and if the Fed keeps cutting rates it'll be an even bigger deal," said Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams in New York.
S&P 500 futures fell 7.75 points, and were below fair value, a mathematical formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract.
Dow Jones industrial average futures dropped 52 points, and Nasdaq 100 futures slid 7.3 points.
The PPI report followed a glum outlook and a disappointing earnings report from No. 1 U.S. home improvement retailer Home Depot Inc
In other earnings news, office supply retailer Office Depot Inc
Even so, investors would look for support from news pointing to efforts to stabilize bond insurers.
(Additional reporting by Kristina Cooke, Editing by Kenneth Barry)
