US Stock Futures Signal Higher Open Ahead Of New Home Sales Data, Bernanke Testimony

The futures on the Dow Jones Industrial Average were up 0.28 percent, the futures on the Standard & Poor's 500 Index were up 0.26 percent and those on the Nasdaq 100 Index were up 0.23 percent.

Investors are likely to focus on the U.S. Federal Reserve Chairman Ben Bernanke’s semi-annual testimony before the Senate Banking Committee at 10 a.m. in Washington D.C., where traders will look for the Bernanke’s view on the outlook for the asset purchase program. Minutes from the recent Federal Open Market Committee's (FOMC) policy meet showed that policy makers were divided on the $85 billion-per-month asset-buying scheme.

Several members expressed concerns about potential costs and risks rising from further asset purchases and a number of them stated that the central bank might have to slow down or halt asset-buying program before substantial improvement in the outlook for the labor market. If Bernanke reassures on the current monetary stimulus programme it will help markets to revert to the recovery story.

“We believe that as he speaks for the committee as a whole, he will stick to the official script. The Chairman will likely suggest that the Fed hopes the program will support substantial improvement in labor market conditions but that the FOMC will continue to assess the size, pace and composition of the program taking into account its efficacy and costs,” a note from Credit Agricole said.

Investors are also expected to focus on January new home sales data to be reported after the markets open Tuesday. The new home sales data, measuring the annualized number of new single family homes that were sold during the previous month, are expected to rise to 381,000 from 369,000 in December.

The Conference Board will release its consumer confidence index for the month of February after the market opens. Economists are predicting that confidence may rise to 62.0 from 58.6 of previous month.

On Monday, the U.S. stock markets suffered their biggest drop in more than three months as sentiment turned negative after inconclusive Italian election results reignited fears of euro zone debt crisis.  The Standard & Poor's 500 Index plunged 1.83 percent and the Dow Jones Industrial Average plunged 1.55 percent while the Nasdaq composite slipped 1.44 percent.

European stock markets were trading sharply lower as well after inconclusive Italian election results. The centre-left coalition led by Pier Luigi Bersani narrowly won the lower house but has failed to secure a majority in the upper house, which is necessary to form a government. London's FTSE 100 plunged 1.39 percent, France's CAC-40 slumped 2.02 percent and Germany's DAX plunged 1.76 percent.

Asian stock markets plunged Tuesday as sentiment was dampened after inconclusive Italian election results sparked fresh concerns on the euro zone's recovery efforts. Japan’s Nikkei tumbled 2.26 percent, Hong Kong’s Hang Seng plunged 1.32 percent and the Chinese Shanghai Composite declined 1.40 percent, while India’s BSE Sensex fell 1.33 percent and South Korea’s KOSPI Composite slipped 0.47 percent.