Stocks were set to fall at the open on Tuesday after data showed new U.S. housing starts and permits unexpectedly slid to record lows in April, tempering hopes of economic stabilization.

The data suggested demand for new construction remained relatively weak as the housing downturn persists and foreclosures mount.

This is not what the market was hoping for. The market was hoping for some sign of an easing in the downdraft in this all-important sector of the economy, said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey.

S&P 500 futures fell 0.10 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones Industrial Average futures dipped 4 points, and Nasdaq 100 futures shed 4.25 points.

Before the bell, Home Depot Inc , a Dow component, reported stronger-than-expected quarterly profit and affirmed its annual outlook.

Its shares dipped 2.8 percent to $25.29 in early electronic trading after soaring more than 6 percent on Monday on the back of stronger-than-expected results from rival Lowe's Cos Inc .

U.S. stocks recovered more than half of their losses on Monday following their worst week in two months, thanks to Lowe's results.

The S&P 500 has climbed from a 12-year closing low on March 9, rising 37.4 percent through the close on May 8. But the benchmark index gave up some ground last week amid profit-taking and disappointment with April retail sales, shaving off 5 percent from its run-up.

At Monday's closing it had regained some ground, finishing up 34.5 percent from the March low.

(Reporting by Ellis Mnyandu; additional reporting by Ryan Vlastelica; editing by Jeffrey Benkoe)

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