NEW YORK (AP) -- Stock futures headed higher Tuesday after a surprisingly strong retail sales report for July provided more evidence of a resilient U.S. consumer.
Dow Jones industrial futures rose 49 points to 13,186 and the broader S&P futures tacked on 5.5 points to 1,408.10. Nasdaq futures rose 12 points to 2,740.
U.S. retail sales rose in July by the largest amount in five months as Americans spent more on cars, furniture and clothes.
Sales rose 0.8 percent in July from June, according to the Commerce Department, after three months of declines, including a 0.7 percent drop in sales in June.
It was much better than the 0.3 percent increase economists expected.
The retail sales report is the first peek into the status of the American economy each month. It's important because spending by consumers accounts for around 70 percent of economic activity.
The strong retail showing overshadowed more bad news from overseas as Europe is edging a bit closer to recession.
Economies in Europe, both in the European Union and nations outside of the monetary union, shrank by a quarterly rate of 0.2 percent after a flat first quarter. A recession is officially defined as two straight quarters of falling output.
The welfare of Europe could have huge implications in the upcoming election and on U.S. economic policy for at least the next four years.
Europe is the biggest market in the world for U.S. exports and dangerous debt levels and record unemployment is already being felt in the U.S., as well as Asia.
China reported this week that its trade and domestic demand for goods have deteriorated faster than expected, with export growth last month plunging to just 1 percent. That was much worse than was expected and much of that was due to woes in Europe.
China's trade surplus with the 27-nation European Union, its biggest trading partner, narrowed by 37.9 percent, Beijing said Monday.
Global weakness brings the health of U.S. retailers, and more importantly, the U.S. consumer, into even greater focus.
The report on U.S. retailers was bolstered by a strong second quarter for Home Depot on Tuesday.
The world's biggest home-improvement retailer posted a 12 percent jump in quarterly net income and boosted its outlook for the entire year. It stuck to its forecast for a 4.6 percent rise in sales, as the housing market stabilizes.
The psyche of the U.S. consumer is closely tied to the beleaguered housing market, and there have been signs of a housing recovery, albeit a slow one.
Late last month, the Standard & Poor's/Case-Shiller home price index indicated that home prices rose in May from April in every city tracked by a leading index, a sign of increasing demand.
On Thursday, the Department of Commerce will provide another glimpse into the health of the housing sector when it releases the housing starts and building permits report for July. The Labor Department reports on weekly unemployment benefit applications on Thursday.