Futures bounce on rate-cut hopes

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NEW YORK (CNNMoney.com) -- The hope of further rate cuts had investors hopeful in the early going Tuesday, as they awaited a raft of earnings and economic readings.

At 8:15 a.m. ET, Nasdaq and S&P futures were higher, pointing to a positive open.

Stocks pulled off a late-session rally Monday, buoyed by expectations for more rate cuts from the Federal Reserve, even after Chairman Ben Bernanke called an emergency meeting last week to make a three-quarters of a percentage point rate cut.

Adding to the positive mood Tuesday was a broad rally in world markets. Stocks surged in Asia to finish the session higher. European markets also rallied in midday trading.

A number of economic readings Tuesday will provide the latest on the battered housing market.

The number of foreclosures actions - which include default notices, auction sale notices and bank repossessions - soared 75% in 2007, with 405,000 households losing their home, according to a report from RealtyTrac, an online seller of foreclosure properties.

At 9 a.m. ET the S&P/Case-Shiller Home Price Index for November is released. The most recent reading showed a record annual decline of more than 6 percent in its various measures of home prices in the nation's largest markets through October.

At 10 a.m. ET the Census Bureau will give its report on fourth-quarter home ownership and the number of vacant homes for sale on the market.

Reports are also due at 8:30 a.m. ET on durable goods orders and at 10 a.m. ET on consumer confidence.

Peter Cardillo, chief market economist at Avalon Partners, said he believes the market will be able to post modest gains as traders await a decision from the Fed due at 2:15 p.m. ET Wednesday.

"We're on Fed watch," he said. "I think we're probably going to see a muted reaction to some of the corporate news and focus on the economic news. If confidence doesn't fall off a cliff, that might be encouraging and we could see a steady day of gains on hopes of a rate cut."

There was more bad news from the housing and finance sector as embattled Countrywide Financial (CFC, Fortune 500), the nation's leading mortgage lender, reported a much larger than forecast loss for the fourth quarter.

The Wall Street Journal also reported Tuesday that pressure from regulators and members of Congress helped push Countrywide to seek a buyout by Bank of America (BAC, Fortune 500). The paper reported that Countrywide was concerned that the Federal Deposit Insurance Corp. would start questioning the safety of funding Countrywide's large mortgage holdings through those insured deposits, and that Sen. Charles Schumer, D-NY, had raised questions with regulators about Countrywide's surge in borrowing from the nation's Federal Home Loan Banks.

Still Countrywide shares climbed 5 percent in pre-market trading as it announced it would pay a dividend for the quarter.

Early Tuesday, diversified manufacturer 3M (MMM, Fortune 500), a Dow component, reported improved earnings, excluding special items, that narrowly beat forecasts.

Dow Chemical (DOW, Fortune 500), the nation's No. 1 chemical company, reported lower earnings that still topped estimates, sending its shares up 2.6 percent in pre-market trading.

Late Monday, American Express (AXP, Fortune 500) said its profit tumbled in the latest quarter as it set aside more money to prepare for cardholder defaults. Shares of the Dow component fell nearly 3 percent in after-hours trading.

In other corporate news, Wal-Mart Stores (WMT, Fortune 500), the nation's largest retailer, announced it will chop prices between 10 to 30 percent on groceries, electronics and other home-related products.

There were numerous reports that Liberty Media (LINTA) attempted Monday to wrest control of Internet and media holding company IAC/InterActiveCorp (IACI, Fortune 500) away from its chairman and founder Barry Diller.

Oil prices continued to build on Monday's rally as traders hoped that another Fed rate cut will help spur economic activity and oil consumption, although prices were well off of earlier highs of the morning. A barrel of light, sweet crude gained 25 cents to $91.24 a barrel in electronic trading.