Stocks headed for a modest bounce at the open on Tuesday, with investors likely to scour the market for beaten-down shares in sectors such as financials after Wall Street skidded to a 12-year low a day earlier.
The benchmark S&P 500 index <.SPX> will start the regular session less than three points from a fresh bear market low, raising the potential for the market to sink on any fresh signs of economic gloom.
Gains from bargain-hunting could be tempered by caution, however, with key economic reports set to show consumer confidence again hit a record low in February and further deterioration in housing.
Even so, shares of JPMorgan
After the bell on Monday JPMorgan announced an 87 percent cut in its dividend to conserve capital and said it has been solidly profitable this quarter. Bank of America
There's a little bit of a bounce after yesterday's steep declines on bargain hunting, said Peter Cardillo, chief market economist at Avalon Partners in New York. But again we are in a technical breakdown. The market is full of fear. The downward trend has still not been broken.
S&P 500 futures rose 1.70 points, and were above 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 climbed 17 points, and Nasdaq 100 futures gained 4.75 points.
Year-to-date, the S&P 500 index is down 17.7 percent, and off 52.1 percent from the October 2007 record peak, a drop stemming largely from worries about the deepening recession and concerns about the health of the banking sector.
In earnings news, leading U.S. home improvement retailer Home Depot Inc
According to Reuters data, the S&P 500 is at its most oversold in three months when measured by its 50-day relative strength index.
Testimony from U.S. Federal Reserve Chairman Ben Bernanke may offer clues on additional steps that could be taken to halt a sharp dive in the economy and he will likely be pressed on government plans to clean up the financial sector.
He is due to deliver the Fed's semiannual monetary policy report to Congress over two days, starting at 10 a.m..
The S&P/Case-Shiller Home Price Index for December and the fourth quarter is due at 9 a.m., while a report on consumer confidence is due at 10 a.m..
(Editing by James Dalgleish)