* 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 consolidation.
"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 New York.
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 the bell.
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 season.
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 full-year guidance.
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.