* S&P 500 coming off first weekly decline in eight
* Investors cautious about Italian elections, Fed policy
* Barnes & Noble rallies on report part of it may go private
* Futures up: Dow 57 pts, S&P 7 pts, Nasdaq 18.25 pts
By Ryan Vlastelica
NEW YORK, Feb 25 U.S. stock index futures
pointed to a higher open on Monday, suggesting the equity rally
was intact despite concerns that the Federal Reserve could
curtail its stimulus for the economy sooner than many expected.
Stocks have been strong performers so far this year, with
the S&P 500 jumping 6.2 percent in 2013 to hover around its
highest levels since 2007. That has prompted many to predict a
pullback, but so far declines have been neutralized as investors
use any dip as a buying opportunity.
Barnes & Noble Inc will be in focus after the Wall
Street Journal reported that Chairman Leonard Riggio was
considering a bid for the company's bookstore business. The
stock jumped 13 percent to $15.25 in premarket trading.
While the S&P fell last week, the decline was a slight 0.3
percent and was the first weekly drop after a seven-week string
of gains, suggesting many may still be looking for a
"People are cautious about investing near five-year highs,
especially given the pace at which we got here, but there's
still room to grow and any pullback should be shallow," said
Robert Pavlik, chief market strategist at Banyan Partners LLC in
S&P 500 futures rose 7 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 added 57
points and Nasdaq 100 futures rose 18.25 points.
The gains have come on strong corporate earnings. With 83
percent of the S&P 500 having reported results, 69 percent of
beat profit expectations, compared with a 62 percent average
since 1994 and 65 percent over the past four quarters, according
to Thomson Reuters data.
In addition, the market has risen against a backdrop of
stimulus from the Federal Reserve. Last week stocks faltered
when some Fed officials seemed to suggest the stimulus may be
curtailed earlier than many expected, though subsequent comments
seemed to allay those concerns.
Another test for equities will come with the looming debate
over massive U.S. government budget cuts that will take effect
on Friday if lawmakers fail to reach an agreement over spending
and taxes. The White House issued warnings about the harm the
cuts. referred to as sequester are likely to inflict on the
economy if enacted.
"Right now we're looking past the sequester, but as we go
forward we may see more anxiety if it doesn't look like our
leaders can get anything together," Pavlik said.
More government-related uncertainty came from Italy, where a
close election left questions about how the country would handle
its three-year debt crisis. Last year, inconclusive Greek
elections sparked a protracted selloff and a period of
uncertainty in U.S. equity markets as well.
Still, European shares were higher on Monday,
rising 0.4 percent after a smooth Italian debt auction.
Lowe's Cos Inc reported earnings that beat
expectations, helped by rebuilding efforts after Hurricane Sandy
in the United States. Shares rose 0.6 percent to $37.90 before
Fourth-quarter earnings for S&P 500 companies are estimated
to have risen 6 percent, according to Thomson Reuters data,
above a 1.9 percent forecast at the start of the earnings
Dow component Johnson & Johnson forecast a negative
impact to its first-quarter earnings as a result of a Venezuelan
currency devaluation, though the charge wouldn't impact its
Dynavax Technologies Inc shares plunged 27 percent
to $2.18 before the bell after the Food and Drug Administration
denied approval for the company's adult hepatitis B vaccine and
sought additional data for evaluate its safety.
U.S. stocks closed higher on Friday, boosted by strong
results from Hewlett-Packard Co, as well as allayed
concerns over Fed policy.