Stock index futures were higher on Tuesday after better-than-expected results from Alcoa Inc and CSX Corp gave a promising start to the earnings season.
Alcoa, the first Dow component to report, posted second-quarter earnings that beat expectations late on Monday, raising hopes of similarly strong results for other companies this season. Rail company CSX also posted a higher-than-expected profit.
Alcoa shares were up 4.5 percent to $11.36 in premarket trading while CSX closed Monday at $52.46.
Alcoa got the season off to a positive start, suggesting that earnings could be better than the market had been indicating, said Rick Meckler, president of LivertyView Capital Management in New York.
Investors have been eagerly awaiting the season for confirmation that a recent rally was justified. Last week, the S&P posted its strongest week of the year, rising more than 5 percent.
Caution had prevailed in the market on Monday ahead of the Alcoa's and CSX's results, with stocks closing slightly higher in light trade.
The season continues in full force, with bellwether Intel Corp scheduled for release after the market closes, and JPMorgan Chase & Co and General Electric Co on tap for later this week.
Alcoa shifted the tone of the market dramatically from cautious to optimistic, but if there's a disappointment in Intel's results that could derail at least the large-cap tech space, said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey.
Kenny added that he felt a disappointing report from Intel was very unlikely.
S&P 500 futures rose 8.5 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 gained 64 points, and Nasdaq 100 futures were up 15.5 points.
Concerns persisted about the euro-zone region after ratings agency Moody's Investor Service cut its rating on Portugal by two notches to A1. Market reaction was relatively muted, though, as rival agency S&P already had cut Portugal's rating by two notches in April.
Everyone expects further volatility in the euro zone region, but now that we have concrete data in the form of earnings, this shouldn't drive the market, Meckler said.
Economic data scheduled for Tuesday includes the U.S. Commerce Department figures for international trade at 8:30 a.m. EDT (1230 GMT) and the monthly federal budget data at 2 p.m. (1800 GMT).
U.S.-listed shares of BP Plc rose 1.8 percent to $37.42 in premarket trading as it prepared to try and seal off its runaway well with a new cap that it says could finally arrest the flow of oil spewing from the floor of the Gulf of Mexico.
The board of American International Group Inc is set to meet this week to consider the future of its AIA unit, with a public float seen as the most likely outcome, sources said on Tuesday. Its shares closed at $35.57 on Monday.
In other stock markets, Europe's pan-European FTSEurofirst 300 <.FTEU3> index of leading shares was up 1.7 percent and was on track to close higher for the sixth straight day. In Asia, equities were pressured by reports that China will not relax tougher property measures anytime soon, a move which touched a nerve among investors who are already sensitive to how much China's economy is slowing.