With traders continuing to express optimism about the financial situation in Europe, stocks may extend their recent upward move in early trading on Tuesday. The major index futures are currently pointing to a higher open for the markets, with the Dow futures up by 37 points.
The upward momentum for the markets comes as traders continue to expect the European Central Bank to take additional steps to address the ongoing debt crisis in the eurozone.
Economic data from Europe showed that the Italian economy shrank in the second quarter, marking the fourth consecutive quarter of contraction. A separate report showed a steeper than expected drop in German factory orders in June.
The disappointing data may be helping to fuel optimism that European officials will be forced to step in and provide additional stimulus.
Amid another light day on the U.S. economic calendar, traders are likely to keep an eye on comments by Federal Reserve Chairman Ben Bernanke.
Bernanke is scheduled to host a town hall event with educators from across the country and will take questions after delivering prepared remarks.
Investors are likely to pay close attention to the question-and-answer portion, hoping that the Fed chief will address the state of the economy and the outlook for monetary policy.
The Federal Reserve is also due to release its report on consumer credit in the month of June at 3 pm ET. Economists expect credit to increase by about $10.3 billion.
In corporate news, shares of Chesapeake Energy (CHK: Quote) could see early strength after the natural gas producer reported strong second quarter profit growth. The company also said it expects $7 billion in asset sales during the third quarter.
Drug store operator CVS Caremark (CVS: Quote) may also move to the upside after reporting better than expected second quarter earnings and raising its full-year guidance.
Meanwhile, Pfizer (PFE: Quote) and Johnson & Johnson (JNJ: Quote) could come under pressure in early trading after halting studies of an experimental drug for Alzheimer's disease after it failed in a second clinical trial.
Stocks gave back ground in the latter part of the trading day on Monday but still ended the session mostly higher after seeing early strength. With the gains on the day, the markets extended the strong upward move that was seen last Friday.
The major averages showed a notable move to the downside going into the close but ended the day in positive territory. The Dow edged up 21.34 points or 0.2 percent to 13,117.51, the Nasdaq rose 22.01 points or 0.7 percent to 2,989.91 and the S&P 500 crept up 3.24 points or 0.2 percent to 1,394.23.
Despite the late day pullback, the major averages all ended the session at their highest closing levels in three months.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Tuesday, adding to yesterday's gains. Japan's Nikkei 225 Index advanced by 0.9 percent, while Hong Kong's Hang Seng Index ended the day up by 0.4 percent.
The major European markets are also moving to the upside on the day. While the U.K.'s FTSE 100 Index has edged up by 0.2 percent, the German DAX Index and the French CAC 40 Index are up by 0.8 percent and 0.9 percent, respectively.
In commodities trading, crude oil futures are climbing $0.50 to $92.70 a barrel after advancing $0.80 to $92.20 a barrel on Monday. Gold futures are rising $2.70 to $1,618.90 an ounce. In the previous session, the precious metal rose $6.90 to $1,616.20 an ounce.
On the currency front, the U.S. dollar is trading at 78.55 yen compared to the 78.25 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.2429 compared to yesterday's $1.2401.
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by RTT Staff Writer
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