US stocks rose in early trading on Tuesday after retail bellwethers Walmart and Home Depot reported positive earnings and Potash, the fertiliser maker, rejected a takeover bid.

Less than an hour after the opening bell, the S&P 500 was up 0.6 per cent at 1,086.29, the Dow Jones Industrial Average had gained 0.5 per cent to 10,351.51 and the Nasdaq was 0.6 per cent higher at 2,195.51.
Before the bell, S&P 500 futures advanced after data showed production in the US rose more than expected in July, climbing 1 per cent – more than double the average forecast. Investors breathed a sigh of relief as recent economic data have pointed to a slowdown in economic growth.

But Joshua Shapiro, chief US economist at MFR, said that following the initial inventory-led boost for the manufacturing sector, which he said appears to be drawing to a close, a key element going forward will be whether final demand picks up sufficiently to maintain upward impetus, or whether momentum will wane once inventories are stabilised.

Investors shrugged off weaker-than-expected housing data, also released before the markets opened.

Construction started on fewer houses than expected during July and the number of building permits fell to its lowest level for more than a year. Housing starts rose 1.7 per cent from the month before to 546,000 – lower than the 560,000 forecast. Building permits, an indicator of future construction plans, fell 3.1 per cent to 565,000.
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