Market Points Lower after Dismal Housing Starts Report

Asian stocks took their cue from the U.S. markets, though the rise was not as buoyant and European shares are currently trading mixed. Yesterday, U.S. stocks staged a rally that finally held; stocks jumped over 2 percent across the board. The Dow rose 213 points, up 2.1 percent to 10,404; the S&P 500 was up 2.35 percent to 1,115; and the NASDAQ soared 2.76 percent to 2,305.

But U.S. futures are slipping Wednesday. Earnings from FedEx met expectations for last quarter, but future revenue fell short and housing data was a bust.

Housing starts were just released and the numbers were worse than expected. Starts fell 10 percent to a 593,000 annual rate in May, the lowest level this year. Also worrisome: building permits, a sign of future construction, unexpectedly declined to a one-year low. We shouldn't have been surprised after yesterday's plunge in the NAHB homebuilder index, but worries are mounting that the housing market could see a rough second half of the year, which could prompt yet another tax credit to be enacted.

The Producer Price Index, a measure of inflation on the wholesale level, fell 0.3 percent, while the core rate, which excludes food and fuel, increased by 0.2 percent. Investors watch the PPI to see if there are any signs that producers could pass on rising costs to consumers.

Industrial Production data will be released, with forecasts ranging from a 0.8 percent-1 percent increase in May, while capacity utilization is expected at 74.5 percent.

In the category of "I'm shocked, shocked to find that gambling is going on here!": the Office of Congressional Ethics is investigating eight lawmakers who held fundraisers within 48 hours of a major House vote on regulatory reform or received substantial donations from business people with a financial stake in the bill.

Regulatory reform wimp-out move of the day: Chris Dodd and Barney Frank stripped out any meat from ratings agency reform legislation. So maybe Warren Buffett is right: while companies like Moody's, Fitch and S&P are cash cows, investors would be wise to do like Warren and ignore the ratings.

Jill Schlesinger is the Editor-at-Large for CBS MoneyWatch.com. Prior to the launch of MoneyWatch, she was the Chief Investment Officer for an independent investment advisory firm. In her infancy, she was an options trader on the Commodities Exchange of New York.