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Dow Jones industrial average (INDU), S&P 500 (SPX) and Nasdaq (COMP) futures were mixed ahead of the opening bell. Dow futures edged down a few points, while the S&P and Nasdaq futures were up a littke. Futures measure current index values against perceived future performance.
On Monday, stocks finished a lackluster session mixed as investors mulled a flurry of corporate deals, and as the tax deal cleared a key Senate procedural hurdle.
Markets were unable to carry over last week's momentum, when stocks churned higher, with the S&P 500 reaching its highest level in two years on Friday.
Investors are largely counting on the extension of the Bush-era tax cuts. The compromise between President Obama and Republicans in Congress could face a final Senate vote Tuesday after passing a key test Monday.
"It has largely been anticipated at this time but I think you will get a little bit of a euphoric bounce when it actually passes the House," said Mark Luschini, chief investment strategist at Janney Montgomery Scott. "If nothing else maybe a source of relief rally that it wasn't stalled out."
An extension of the Bush-era tax would keep cash in the wallets of Americans. And since consumers are responsible for the lionshare of the spending in the U.S., confident consumers willing to spend is key to an economic recovery.
Reports any that take "a litmus test of the consumer" will be top of mind for investors between now and the end of the holiday shopping season, said Luschini.
Economy: The Federal Reserve's policy statement is due at 2:15 p.m. ET. The central bank is widely expected to hold interest rates near 0%, where they have been since the financial crisis took hold in 2008.
"I am expecting that we don't hear much in the way of new language," said Luschini. Investors will be keeping a close eye for any update on the Fed's read on the health of the economy or the Fed's quantitative easing program.
Government reports on retail sales and inflation at the wholesale level will be released before the market opens.
Economists expect U.S. retail sales to have risen 0.5% in November, according to consensus estimates from Briefing.com. Sales jumped 1.2% in October. Excluding the automotive sector, sales are forecast to have edged up 0.6% in the month.
The producer price index for November is expected to gain 0.5%, following a 0.4% increase the month before. Core PPI -- which excludes food and energy prices -- is forecast to rise 0.2%, following a dip in October.
Luschini doesn't expect that the PPI report will surprise investors, but retail sales could be a mover. Retail sales "could change the sentiment of the market -- at least for today -- should it come in a little bit weaker than expected."
After the market opens, another report is expected to show business inventories grew 1.1% in October.
Companies: BestBuy (BBY, Fortune 500) shares slid 10% in premarket trading after the home electronics retailer lowered its fiscal year outlook and posted a 3.3% decline in quarterly same-store sales.
Homebuilder Hovananian (HOV) reports after the closing bell.
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