* February housing sales data on tap at 10 a.m.
* Office Depot, OfficeMax in merger talks - source
* Futures up: Dow 21 pts, S&P 2.9 pts, Nasdaq 7.5 pts
By Chuck Mikolajczak
NEW YORK, Feb 19 U.S. stocks were poised to open
modestly higher on Tuesday after the long holiday weekend,
putting the S&P 500 on track to extend its seven-week winning
streak on increased M&A activity and before housing market data.
The S&P 500's advance is the longest streak since
January 2011, and the benchmark index is up 6.6 percent so far
The strong start was fueled by legislators in Washington
temporarily averting automatic spending cuts and tax hikes as
well as by stronger-than-expected earnings and economic data.
The Federal Reserve's stimulus policy has also been a major
But further gains for the S&P 500 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 the matter, and
Democrats and Republicans have until March 1 to resolve
differences or the cuts, which are predicted to damage the
economy, will take effect.
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.
Last week, deals were reached for the acquisiton of H.J.
Heinz Co by Berkshire Hathaway and the sale by
General Electric of its remaining stake in NBCUniversal
to Comcast Corp.
"M&A is providing an enormous amount of enthusiasm in
pockets and it is really a function of the cost of money, the
cost of borrowing. It is a sign there is a shift going on in the
economy that is very, very positive," said Peter Kenny, managing
director at Knight Capital in Jersey City, New Jersey.
"At the same time, if you take the M&A activity out of the
picture, you will see that many on the Street are expecting a
Office Depot Inc surged 30.9 percent to $6.01 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. A deal could
come as early as this week. OfficeMax shares jumped 24.4 percent
to $13.37 before the opening bell while larger rival Staples Inc
shot up 13.9 percent to $14.75.
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 2.9 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 21
points and Nasdaq 100 futures added 7.5 points.
U.S. markets were closed on Monday for the Presidents Day
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.
Express Scripts rose 3.9 percent to $57.75 in
premarket trading after the pharmacy benefits manager posted
Humana Inc slumped 9.4 percent to $70.70 before the
open after the health insurer said the government's proposed
2014 payment rates for Medicare Advantage participants were
lower than expected and would hurt its profit outlook.