Some retailers reported better-than-expected third-quarter earnings, including Home Depot (NYSE: HD), Saks (NYSE: SKS) and Target (NYSE: TGT). But the retailers also cautioned that they were nervous about the holiday shopping season, say Stephen Bernard and Tim Paradis for the Associated Press. The earnings follow yesterday’s report that showed October retail sales rose 1.4%. (Retail sales rise). Retail HOLDRs (NYSEArca: RTH) is down about 1.3% this morning; Target is 8.5% and Home Depot is 12%. (For more stories about retail ETFs, visit our category page).

Wholesale inflation fell unexpectedly last month while industrial output rose less than forecast. This gives the Federal Reserve more impetus to keep interest rates at record lows, report Luca Di Leo and Jeff Bater for The Wall Street Journal. The producer price index rose by 0.3%, but fell 0.6% excluding food and energy prices.

The report eases concerns that inflation will be a near-term threat to the economic recovery.

Mortgage delinquencies shot to another record in the third quarter. As of Sept. 30, 6.25% of all U.S. mortgage loans were 60 days or more past due. Last year at this time, 3.96% of all homes were delinquent, reports Eileen AJ Connelly for the Associated Press. An expert said that for the situation to right itself, home values and unemployment need to recover. (For more stories about real estate, visit our category page).

Wal-Mart (NYSE: WMT), Target (NYSE: TGT) and Amazon (NasdaqGS: AMZN) are engaged in an online price war over DVDs, reports Jeremy Hobson for Maretplace. (How name brands are boosting consumer staples).

Wal-Mart lowered prices of popular DVDs to $10 in hopes that the low prices would help draw customers to shop at their site and buy big-ticket items. Not to be bested, Amazon is offering DVDs at $9.99, but Wal-Mart countered with a $9.98 offer. (Internet ETF to capture holiday shopping climate)

Jeff Dotson, marketing teacher at Vanderbilt University, says these companies are operating on thin margins, and if enough copies of DVDs are sold, the companies can take a hit. Frank Luby, pricing expert at Simon Kutcher and Partners, argues the online retailers are taking a necessary hit in order to obtain the title of “lowest-priced retailer.”

For more information on the retail sector, visit our retail category.

• First Trust Dow Jones Internet Index (NYSEArca: FDN): currently up 67.5% year-to-date; AMZN is 5.6%

• Vanguard Consumer Discretionary ETF (NYSEArca: VCR): up 37.3% year-to-date; TGT is 3.0%, AMZN is 2.8%

• Retail HOLDRs (AMEX: RTH): up 24.3% year-to-date; WMT is 20.2%, TGT is 8.5%, AMZN is 7.3%

Max Chen contributed to this article.

Traditionally, the retail sector has its best month at the end of year, when everyone is out spending their hard-earned cash on Christmas gifts, but this year things may be a bit different.  The reason behind this is high unemployment rates, restricted credit availability, foreclosures and record levels of savings, states Mike Duff on bNet.

On the other hand, a desire to spend may rally somewhat if gas prices remain stable, home values continue to strengthen and the stock market’s comeback persists enabling retailers to avoid another negative season.

At the end of the day, only time will tell us what happens to the sector that is so dependent on the Christmas season.

• Retail HOLDRs (NYSEArce: RTH)

• SPDR S&P Retail (NYSEArca: XRT)

For more stories on retail, visit our retail category.

Kevin Grewal contributed to this article.

The Commerce Department reported that construction of new homes and apartments fell in July by 1% last month to a seasonally adjusted annual rate of 581,000, down from a revised rate of 587,000 in June.  Economists were expecting the rate to be at 600,000.  Building permits, a good indicator of future activity, fell by 1.8% as well.  The news sent the iShares Dow Jones U.S. Real Estate (IYR) up nearly 0.6% in morning trading.

In the retail sector, the largest home improvement retailer, Home Depot (HD), said that its second-quarter profits fell by 7%. Home Depot lifted its guidance for full-year earnings from continuing operations, however.  The Atlanta-based company reported earnings of $0.67/share, topping Wall Street’s expectations of $0.59/share.

Retail giant Target (TGT) reported earnings of $0.79/share, beating analysts’ expectations of $0.66/share as the company witnessed strong operating margins in their retail and credit card segments.  Additionally, discount retailer TJX Companies (TJX), which operates stores like TJ Maxx and Marshalls, reported earnings of $0.61/share beating Wall Street’s expectations by a penny as the company witnessed an increase in sales by 4%.  The news sent the Retail HOLDRs (RTH) up nearly 0.8% in morning trading.

In the financial sector, CIT Group (CIT) reported a second-quarter loss of $1.68 billion, much higher than the $1.95/share loss forecast by Wall Street.  One of the nation’s largest lenders to small- and mid-size businesses is facing an uphill battle. Its borrowing costs are starting to outpace the money that it generates from lending to customers and there are fears that it may have to file for bankruptcy protection.

The Labor Department reported that wholesales prices dropped 0.9% last month, which tripled the decline that economists were expecting. This pushed the decline of wholesale prices over the last 12 months to 6.8%, the biggest decline since 1947.  The decline was primarily driven by big decreases in both energy and food costs. For the month of July, wholesale energy prices dipped 2.4% and food prices fell by 1.5%.

Overall, the Dow Jones Industrial Average added 0.6%, while the S&P 500 gained 0.8% and the Nasdaq was up 0.7% in morning trading.

For more stories on the retail sector, visit our retail category.

Kevin Grewal contributed to this article.

U.S. businesses reduced their inventories for the 10th consecutive month in June, despite total business sales notching the first increase in almost a year, says Martin Crutsinger for the Associated Press. Businesses reduced inventories by 1.1%, slightly more than expected.

The Commerce Department reported that retail sales fell 0.1% last month, missing analysts’ expectations of a gain of 0.7% and marking the first setback following two months of modest sales gains.  Despite this overall weak performance, the “cash for clunkers” program has been a hit, sending sales of automobiles up 2.4% in July.  Despite the news, the Retail HOLDRs (RTH) were up 0.2% in morning trading.

The Labor Department said initial jobless claims increased to a seasonally adjusted 558,000 from the 554,000 reported in the previous week.  Analysts expected new claims to fall to 545,000, while the number of people remaining in the benefit rolls fell to 6.2 million from 6.34 million.

Department store sales fell 1.6% and the broader category of general merchandise stores posted a decline of 0.8%.  This is evident in the performance of Wal-Mart (WMT), which reported flat second-quarter earnings.

Oil rose above $71/barrel  as the International Energy Agency boosted its global crude demand forecast.  Despite the boost in demand forecast, the IEA still states that demand this year will likely fall 2.7% as global economies struggle to emerge from the recession.  The news sent the United States Oil Fund (USO) up 0.6% in morning trading.

Despite opening on a sour note, all three major U.S. indexes jumped into positive territory with the Dow Jones Industrial Average adding 0.1%, the S&P 500 jumping nearly 0.3% and the Nasdaq gaining 0.4%.

For more stories on the retail sector, visit our retail category.

Kevin Grewal contributed to this article.

Books at Barnes & Noble (BKN) will be able to be read through an iPhone, Blackberry or laptop and desk computer as the largest bookseller is going to carry over into an e-bookstore after acquiring Fictionwise. Motoko Rich for The New York Times reports that more than 500,000 of the books now offered electronically on BN.com can be downloaded free, through an agreement with Google.

Barnes & Noble will be up against Amazon (AMZN) as the world’s largest e-bookstore, which offers about 330,000 choices for its Kindle . The number of e-books available on BN.com compares with 1.2 million in stock that can be bought in print form from the company’s site.

Best-sellers and new releases will be available in e-book version for $9.99 for the first six months of its release, a price comparable to Amazon’s Kindle service.

Rather than “stealing business” from Amazon, industry insiders say that they are promoting the growth of e-books as an industry as a whole.

ETFs offer the comfort of investment in these companies without the guessing of single stock-picking:

• Consumer Direct Select Sector SPDR (XLY): up 13.6% year-to date; Amazon 3.7% of assets

• Retail HOLDRs (RTH): up 6.8% year-to-date; Amazon 7.5%

For more stories about retail, visit our retail category.

Wall Street’s largest surviving investment bank, Goldman Sachs Group (GS) reported a 33% rise in earnings on strong trading results, improving markets and an upswing in advisory fees.  Goldman reported a net profit of $4.93/share, blowing away analysts expectations of $3.49/share.  Despite this outperformance, the Financial Select Sector SPDR (XLF) was down 1.4% in morning trading.

Diversified healthcare company, Johnson & Johnson’s (JNJ) reported a drop in second quarter earnings by 5% and earned $1.15/share beating Wall Street’s expectations of $1.11/share.  The decline in earnings was caused by a decline in revenues both globally and domestically.  On the positive side, consumer sales were strong indicating a bit of health in the economy.  The news sent the Pharmaceutical HOLDRs (PPH) up nearly 0.5% in morning trading; JNJ is 24.4%.

Many investors are still waiting to see how well chip-maker Intel (INTC) and fast-food giant Yum! Brands (YUM) performed in the second quarter as they are both expected to release earnings today after the bell.

The Labor Department announced that wholesale prices rose in June with a 1.8% jump in the Producer Price Index, which tracks the price of goods before they hit the stores.  This rally in wholesale prices was led by a rise in energy prices.

To further extend the string of good news, the Commerce Department stated that retail sales rose by 0.6% last month.  This is the second straight month of increases and a good sign that the economy may be rebounding.  The strength came from a price-driven surge at gasoline stations and a jump in automotive sales.  Despite this uplifting news, the Retail HOLDRs (RTH) was down nearly 0.3% in morning trading.

Overall, all three major U.S. indexes are down in morning trading.   The Dow Jones Industrial Average is down nearly 0.2%, the S&P 500 is down about 0.1% and the Nasdaq has given up nearly 0.3%.

For more stories on financials, visit our financial category.

Kevin Grewal contributed to this article.

The Labor Department announced that the number of initial jobless benefits claims fell last week to 565,000, the lowest level since January and much better than the 605,000 expected by analysts.

Some more optimism was delivered to Wall Street after aluminum maker Alcoa (AA) released earnings after the bell yesterday and beat expectations.  The aluminum maker reported higher revenues and a smaller loss than anticipated.  The news helped send the iShares Dow Jones U.S. Basic Materials (IYM) up nearly 0.6% in intraday trading; AA is 3.7%.

Earnings season continues today with 3Com (COMS) beating expectations, while Chevron (CVX) is expected to report at 5 p.m. ET. Analysts seem optimistic about the company’s forthcoming report.

The Commerce Department said that wholesale inventories fell for the ninth straight month, by 0.8%,  as businesses continued to trim stockpiles. Retailers also reported weak June sales numbers, as consumers remain wary of the condition of the economy.  Same-store sales across the board declined when compared to the previous year, an indicator that the health of the retail sector is still in question.  The news sent the Retail HOLDRs (RTH) down 0.5% in morning trading.

Problems seem to continue to emerge in the financial sector as Citigroup (C) just recently announced the departure of a key executive.  Its former CFO and current chairman of Citi Holdings, Gary Crittenden, is leaving the operation in an attempt to stabilize the firm’s operations and try to turn it back to profitability.

In the housing sector, 30-year mortgage rates fell to 5.2%, which has ignited an increase in mortgage applications.  This is a good sign, because the housing markets have to regain clout in order for the economy to turn around.

The Dow Jones Industrial Average dipped about 0.1%, and both the S&P 500 and Nasdaq gained 0.2% in morning trading.

Kevin Grewal contributed to this article.

The Labor Department reported that new jobless claims unexpectedly increased last week by 15,000 to a seasonally adjusted 627,000, surprising most economists, who expected the number to drop to 600,000.  This increase added to the total number of Americans receiving unemployment benefits shooting the number up to 6.74 million.

On a positive note, a revised reading on gross domestic product indicated that a turnaround in the economy is not a far-fetched idea. The broadest measure of the nation’s output suggested the economy posted an annualized decline from January through March by 5.5%, a bit better than the 5.7% estimated a month ago, and economists think that the economy is shrinking at a slower pace, states the Associated Press.

To add to today’s good news, consumers boosted their spending at a 1.4% rate, down from a 1.5% growth rate estimated last month.  This sent the Retail HOLDRs (RTH) up nearly 2% in intraday trading.

In the financial world, Bank of America (BAC) has managed to raise more money than the government has said it needed to withstand a deepening recession.  Bank of America is expected to raise a whopping $38 billion worth of capital, $4.1 billion more than the $33.9 billion the government said it needed to raise, surprising most in how quickly the bank was able to do it.  This is all despite the controversy stirred up that the Fed may have halted a possible merger between Bank of America and Merrill Lynch.  The news sent the Financial Select SPDR (XLF) up nearly 1% in morning trading; BAC is 7.9%.

The wheels seem to be turning in Washington. Vice President Joe Biden recently announced that more than half of economic stimulus money set aside for highway projects has already been allocated.  In more detail, he stated that $19 billion has been set aside for 5,300 transportation projects.  The news sent the iShares S&P Global Infrastructure Index (IGF) up nearly 2% in morning trading.

Overall, all three major indices are up in morning trading.  The Dow Jones Industrial Average is up 1.8%, the S&P 500 is up 1.8% and the Nasdaq gained nearly 1.6%.

For more stories on financials, visit our financial category.

Kevin Grewal contributed to this article.

Signs of trouble in the real estate market still persist: new home sales dropped 0.6% in May, falling short of economists’ forecasts. There’s also a 10-month backlog of new homes.

The Mortgage Bankers Association has recently announced that it expects refinancing volumes to reach $1.3 trillion this year, down from the $2 trillion it had previously projected forcing it to place its optimistic outlook the industry on the back burner.  This means that fewer homeowners will refinance their houses, in hopes of cheaper mortgages and a little extra spending cash, states Tom Petruno of The Los Angeles Times.

On reason that this forecast has been scaled back is the recent rebound in home loan rates, which have been pushed up by rising long-term bond yields, thanks to the government’s borrowing spree.

An ETF that could be directly influenced is the iShares Dow Jones U.S. Real Estate Index Fund (IYR) which is  down 14% year-to-date.

For more stories on real estate, visit our real estate category.

Kevin Grewal contributed to this article.