Stocks were set to rise at the open on Monday after six weeks of declines for the S&P 500 left equities at more attractive levels.
The S&P 500 <.SPX> has tumbled nearly 7 percent on the back of a barrage of soft economic data after closing on April 29 at its highest closing level in nearly three years.
Worries about a global economic slowdown have continued to hover over equities markets, with investors expecting the S&P 500 to slip toward its March low near 1,250 before a rebound. The benchmark closed near 1,271 on Friday.
The market has been oversold over the last six weeks, so a short-term rebound on short-covering is not out of the question, said Chad Morganlander, portfolio manager at Stifel, Nicolaus & Co in Florham Park, New Jersey.
He said even a rise of 1 percent from current levels would be a normal gyration within the short-term trading pattern that wouldn't alter the market's current trend.
I would start increasing my level of risk and exposure near the 1,200 range on the S&P 500, he said.
S&P 500 futures rose 6.3 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 gained 47 points, and Nasdaq 100 futures added 8.25 points.
In a sign that valuations are hitting enticing levels, insurer Allied World Assurance Co Holdings Ltd
Also, VF Corp
Merger activity is likely (to continue) because of the low interest rates, and it's also attractive from an operational point of view, said Rick Meckler, president of investment firm LibertyView Capital Management in New York. That will be a continued positive (for equities).
European shares were up 0.5 percent as bargain hunters picked through the debris after six weeks of losses. Concerns over the health of the global economy and the lack of consensus from policymakers on how to tackle Greece's debt crisis limited gains.
European policymakers appeared no closer to finalizing an agreement over whether private investors would take part in a restructuring of Greek debt.
The global economic outlook continued to darken overnight, as data showed China's money growth slowed to a 30-month low in May and banks extended fewer loans than expected as tighter monetary policy started to bite.
In Japan, core machinery orders unexpectedly fell, suggesting a bumpy recovery from a devastating earthquake and tsunami as companies delayed capital spending until reconstruction-driven demand materializes.
(Reporting by Rodrigo Campos; editing by Jeffrey Benkoe)