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Stocks signal higher open after sell-off

Wall Street signaled a moderate rebound Tuesday as investors awaited economic readings and Federal Reserve Chairman Ben Bernanke's testimony on monetary policy.

The data on the economy follow another sharp drop in the market Monday that left the Dow Jones industrial average and the Standard & Poor's 500 index near 12-year lows.

Wall Street is awaiting a preliminary report on consumer sentiment for February that is expected to show Americans are growing more pessimistic amid rising layoffs, falling home prices and hard-hit retirement accounts.

The Conference Board's Consumer Confidence index is expected to come in at 35.5 for February, down from 37.7 in January, according to economists surveyed by Thomson Reuters.

Investors are also looking for earnings reports from retailers Macy's Inc., Target Corp. and Office Depot Inc. Consumers worried about the economy have stayed away from stores in recent months, hurting retail earnings.

Beyond the economic and corporate readings, investors will be eager for any insight Bernanke can provide on his expectations for the economy and for the administration's plans to assist banks struggling with bad debt.

His testimony comes a day after the government moved closer to dramatically expanding its ownership stakes in the nation's banks, including Citigroup Inc. The Treasury Department, the Fed and other banking regulators said Monday they could convert the government's stock in the banks from preferred shares to common shares.

Wall Street is worried about nationalization of banks but is also afraid of the prospects for the banks if left to make do on their own.

"Fear is winning. That's what is dominating everybody's perspective," said Rich Hughes, co-president of Portfolio Management Consultants in Los Angeles.

He said any rallies are likely to be based on hope or on rebounds from selloffs. He contends Wall Street still hasn't seen the wrenching decline that is often needed to scare investors from the market and set the ground for a lasting recovery.

"The underlying fundamentals just aren't there to support anything that's sustainable right now," he said. "We haven't seen the capitulation that you'd want to see before you'd get thoroughly enthused."

Stock futures rose early Tuesday following the sharp drop in stocks Monday. Some bargain-hunting often follows steep drops in the market.

Dow Jones industrial average futures rose 64, or 0.90 percent, to 7,180. Standard & Poor's 500 index futures rose 6.30, or 0.85 percent, to 751.30, while Nasdaq 100 index futures rose 3.50, or 0.31 percent, to 1,139.25.

On Monday, all the major indexes tumbled more than 3 percent. The Dow Jones industrial average fell 251 points to its lowest close since May 7, 1997, while the Standard & Poor's 500 index logged its lowest finish since April 11, 1997.

The market's slide has been tough on long-term savers. An investor who in 1997 had $50,000 in a 401(k) plan that tracks the S&P 500 would have lost money. The fund would now be worth $46,256. Still, stocks tend to perform better after steep pullbacks and their long-term returns often outpace other investments.

Bond prices were mixed early Tuesday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, slipped to 2.78 percent from 2.76 percent late Monday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.30 percent from 0.29 percent Monday.

The dollar was mixed against other major currencies, while gold prices fell.

Light, sweet crude rose 3 cents to $38.47 per barrel in electronic trading on the New York Mercantile Exchange.

Stocks fell in afternoon trading in Europe after Monday's drop on Wall Street. Britain's FTSE 100 fell 0.99 percent, Germany's DAX index fell 1.26 percent, and France's CAC-40 fell 0.50 percent. Earlier, Japan's Nikkei stock average fell 1.5 percent.

Tuesday's session comes ahead of a speech by President Barack Obama before the House of Representatives. He is expected to make the case that more has to be done to revive the economy. The speech is scheduled for 9 p.m.