* Housing data on tap
* Office Depot, OfficeMax in merger talks - source
* Futures up: Dow 22 pts, S&P 3.1 pts, Nasdaq 5.75 pts
By Chuck Mikolajczak
NEW YORK, Feb 19 U.S. stock index futures
advanced on Tuesday, indicating the S&P 500 will build on its
seven-week winning streak on optimism about M&A activity and
before data on the housing market.
The S&P 500 has risen for seven straight weeks, its
longest streak since January 2011, and is up 6.6 percent for the
The strong start to the year was fueled by legislators in
Washington temporarily averting a series of automatic spending
cuts and tax hikes as well as better-than-expected earnings and
economic data. The Federal Reserve's stimulus policy has also
been a major factor.
But further gains for the benchmark S&P index have been a
struggle as investors look for new catalysts to lift the index,
which hovers near five-year highs.
The compromise by lawmakers on across-the-board spending
cuts, known as sequestration, only postponed until March 1 a
resolution to the congressional budget fight.
The uptick in merger and acqusition activity, a sign of
optimism about the outlook on Wall Street, has resulted in more
than $158 billion in deals announced so far in 2013.
"The firm market tone continues, fueled by a lack of
negative surprises as well as an increase in M&A activity,
adding confidence to market valuations," said Andre Bakhos,
director of market analytics at Lek Securities in New York.
"The market has been able to shrug off minor negatives as it
looks ahead to a potential bigger hurdle in the sequestration
-until then, the situation looks stable."
Office Depot Inc surged 26.1 percent to $5.79 in
premarket trading after a person familiar with the matter said
the No. 2 U.S. office supply retailer is in advanced talks to
merge with smaller rival OfficeMax Inc and a deal could
come as early as this week. OfficeMax shares jumped 13.7 percent
to $12.22 before the opening bell.
Economic data on tap includes the National Association of
Home Builders/Wells Fargo index on housing sales for February at
10 a.m. (1500 GMT). Economists in a Reuters survey expect a
reading of 48 compared with 47 in January.
Improving housing data has been cited by analysts as one of
the key factors in the stock market rally.
S&P 500 futures rose 3.1 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 22
points and Nasdaq 100 futures added 5.75 points.
Computer maker Dell reports fourth-quarter results,
expected to show earnings per share fall to $0.39 from $0.51 one
year earlier. Analysts will have their first chance to question
management on a buyout deal struck earlier this month by Chief
Executive Michael Dell, private equity firm Silver Lake and
According to the Thomson Reuters data through Friday, of the
388 companies in the S&P 500 that have reported results, 69.8
percent have exceeded analysts' expectations, compared with a 62
percent average since 1994 and 65 percent over the past four
Fourth-quarter earnings for S&P 500 companies are estimated
to have risen 5.6 percent, according to the data, above a 1.9
percent forecast at the start of the earnings season.
European shares rose on Tuesday, lifted by gains at food
group Danone and fresh signs of a German economic
recovery, although broader market sentiment remained cautious
ahead of Italian elections this weekend.
Philippine and Australian shares scaled new heights, but
other Asian shares were mixed, with worries about an
inconclusive outcome in Italy's election and U.S. budget talks.