Stock index futures signaled a higher open on Wall Street on Tuesday, as expectations grew that a default of Greek debt could be avoided and sovereign risk in other euro zone countries could be contained.
Euro zone finance ministers said the Greek government had until July 3 to approve new steps to get the next installment of 110 billion euros in European Union and International Monetary Fund aid.
The market expects a vote of confidence in Greek Prime Minister George Papandreou new cabinet to pass on Tuesday -- the first of three hurdles the government must clear to avert the euro zone's first sovereign debt default. The vote is due around 5 p.m. EDT.
The impact from the Greece vote will surely be positive on the market, but I believe it will be relatively short. Yes, we will see a follow-through for couple days but the fundamental problem is that the global economy is slowing. Everyone is pointing fingers at Greece for every tick up and down, but that's day-to-day trading. I don't see this resolving the fundamental issue, said Jack DeGan, chief investment officer at Harbor Advisory Corp in Portsmouth, New Hampshire.
S&P 500 futures gained 5.5 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration of the contract. Dow Jones industrial average futures advanced 54 points, and Nasdaq 100 futures rose 12.25 points.
The Federal Reserve Open Market Committee (FOMC) begins a two-day meeting later Tuesday. The Fed is expected to cut its growth forecast for 2011, but the central bank and its chairman, Ben Bernanke, will likely continue to argue the slowdown is temporary and the economy will pick in the second half of the year.
U.S. home sales data for May is due at 10 a.m. EDT. Analysts in a Reuters survey expected sales to drop to about 4.8 million, compared with 5.05 million the month before.
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U.S. lawmakers working to rein in the country's rising debt said they will have to make substantial progress this week to ensure the country retains its top-notch credit rating.
Rating agency Fitch said it would place the credit rating of the United States on watch negative if the debt ceiling is not raised by August 2, when the government has warned it may not be able to borrow more.
On Monday, stocks erased early losses as the S&P 500 dipped toward 1,259.78, its 200-day moving average, which is often viewed as a pivotal point in determining market direction.
(Reporting by Angela Moon; editing by Jeffrey Benkoe)