U.S. Stocks Expected To Extend Gains On Tame Inflation

NEW YORK (MarketWatch) -- U.S. stocks on Wednesday looked to extend the prior day's gains after the government reported as-expected retail sales and benign wholesale inflation.

"The combination of the economic data, which all came in favorably, and overall positive tone after yesterday's recovery, led to a shift in investor psychology," said Art Hogan, chief market strategist at Jefferies & Co.

Futures for the Dow Jones Industrial Average rose 67 points to 13,397.

S&P 500 futures gained 10.70 points to 1,494.00, while Nasdaq 100 futures advanced 32.25 points to 2,099.00.

Ahead of the opening bell, the government reported a 0.1% rise in wholesale prices, with the core producer price index, which excludes food and energy, flat. Economists had expected a 0.1% gain in both figures.

The Commerce Department reported a modest 0.2% rise in U.S. retail sales in October, slightly ahead of expectations. .

"Ongoing strength in headline inflation should keep the FOMC on its heels regarding inflation risks, even if core inflation remains restrained for now and the market remains more interested in recession risks," said analysts at Action Economics.

Shares of Bear Stearns gained after the investment bank said it anticipates a write-down of $1.2 billion in the fourth quarter, and is also trimming costs.

HSBC Holdings said it would have to write off another $3.4 billion from its U.S. business in the third quarter, but its pre-tax profit would increase due to strong growth in Asia and the Middle East.

On the New York Mercantile Exchange, crude-oil futures gained $1.52 to $92.69, while gold futures gained $13.0 to $812.0 an ounce.

By Kate Gibson