Stocks poised for early pop

NEW YORK (CNNMoney.com) -- U.S. stocks were poised for early gains ahead of the market open Tuesday, after reports that showed an bigger-than-expected uptick in new home construction.

Dow Jones industrial average (INDU), S&P 500 (SPX) and Nasdaq (COMP) futures all rose nearly 0.2% ahead of the opening bell. Futures measure current index values against perceived future performance.

Early Tuesday, investors welcomed two government reports on new home construction.

Housing starts hit a four-month high, surging 10.5% to an annual rate of 598,000, the Commerce Department said. Economists were expecting the annual rate to rise to 550,000 for the month, up from 541,000 in July, according to consensus estimates from Briefing.com.

Building permits also rose, edging up 1.8% to an annual rate of 569,000 in August.

Investors are also gearing up for the Fed's announcement on interest rates, due at 2:15 p.m. ET.

The Fed is widely expected to leave rates unchanged. But, as has been the case for nearly two years, investors will be looking for signals about the economic outlook and for references to quantitative easing, the central bank's recent policy of buying bonds to stimulate the economy.

At its previous meeting, the Federal Reserve took a cautious stance about the recovery, saying it plans to reinvest its debt into longer-term Treasury securities.

Going forward, it's unlikely that Fed policymakers will authorize new asset purchases at the meeting, but might want to signal their intentions to do so in the future, Kathy Lien, director of currency research at Global Forex Trading said in a note to investors.

"The Fed could wait until the economy deteriorates further before implementing additional quantitative easing, but if they want to pre-empt the potential slowdown, it may be smarter to act before the slowdown materializes because it will be a more difficult fix," she said.

Companies: Hewlett-Packard said late Monday that it has settled its lawsuit against Mark Hurd, the company's ousted CEO, after the tech giant claimed he breached his separation agreement by taking a job at rival Oracle.

Hurd resigned from HP (HPQ, Fortune 500) in August after he was cleared of sexual harassment charges but accused of violating the company's code of ethics. Shares of HP rose 0.8% in pre-market trading.

World markets: European shares edged higher in mid-day trading. Britain's FTSE 100 gained 0.5%, the CAC 40 in France rose 0.6% and Germany's DAX rose rose 0.5%.

In Asia, the Hang Seng index in Hong Kong and Shanghai Composite finished the session slightly higher. Japan's Nikkei index fell about 0.3%.

Currencies and commodities: The dollar fell against the euro and the Japanese yen and was up slightly against the British pound.

The expiring October oil futures contract fell 98 cents to $73.88 a barrel. Oil futures for November delivery, which will be the active contract beginning Wednesday, fell 37 cents to $75.82 a barrel.

Gold for December delivery fell $4.80 to $1,276 an ounce. Gold continues to break records, settling at a record-high close at $1,280.80 an ounce on Monday.

Bonds: The yield on the benchmark 10-year note fell to 2.71% from 2.72% late Monday.