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Pre-Market Primer: Retail Sales Charge Ahead, Eurozone Economy Nearing Recession


Sales are improving, but Groupon's meteoric growth seems like a thing of the past.

MINYANVILLE ORIGINAL Retail sales increased by 0.8% in July, the first increase after four straight months of declines. Economists expected a more modest 0.3% gain. Recent financial statements from retail companies such as Gap (GPS) and Macy's (M) showed that many customers are starting to open their wallets.

Stock futures climbed on the unexpectedly bullish sales data. Dow (^DJI) futures pulled ahead 0.33% to 13,187. S&P 500 (SPY) and Nasdaq (^IXIC) futures rose 0.42% to 1,408.50 and 2,739.50, respectively.

The eurozone's collective economy shrank by 0.2% sequentially, or 0.4% on a quarterly basis in the second quarter, according to Eurostat. If the contraction continues into the present quarter, the eurozone and wider European Union -- the largest economy in the world when pooled together -- will be officially in recession. The bifurcation of the eurozone countries continues, however. Germany's GDP grew by 0.3% in the June quarter. The Netherlands narrowly escaped a triple-dip recession with 0.2% growth, and France stayed frozen in place for the third consecutive quarter. The UK recession deepened as the economy contracted by 0.7%.

Though Groupon (GRPN) pulled its first-ever profit in the latest quarter, shares fell 21% ahead of the bell after reporting earnings. Revenue rose 45% from the year earlier and 2% sequentially to $568.3 million; earnings rose to $0.04 per share from a $0.35 per share loss in the second quarter of 2011. Sales were mainly driven by the company's new lower-margin Groupon Goods business that sells goods directly to customers.

Nevada gambling regulators are investigating claims that Las Vegas Sands (LVS) broke foreign bribery laws in its business in Macau, where the company makes and keeps most of its revenue. This comes on the heels of inquiries by the Department of Justice and the Securities and Exchange Commission into possible improper payments to at least one Chinese legislator. The company, and its billionaire Republican donor extraordinaire, Sheldon Adelson, have not been accused of any crimes at this time.

Home Depot (HD) is also likely to trade actively. Shares of the company rose 1.1% after it reported better-than-expected earnings, though revenue disappointed. Net income rose 13% in the second quarter to $20.57 billion from $20.23 billion last year, sending earnings up to $1.53 billion, or $1.01 per share, from $1.36 billion, or $0.87 per share, in the year earlier.

Twitter: @vincent_trivett
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