By Leah Schnurr
NEW YORK (Reuters) - Wall Street was set to start slightly higher on Tuesday after encouraging economic data from China, while investors braced for corporate earnings that are expected to show only modest growth.
J.C. Penney shares slid 6.1 percent to $14.90 in premarket trading after the department store chain replaced Chief Executive Ron Johnson with his predecessor.
Forecasts for U.S. first-quarter earnings have been scaled back in 2013, with profits seen rising just 1.6 percent from the year-ago quarter, according to Thomson Reuters data. In January, earnings were seen rising 4.3 percent.
A significant driver of the rally has been the extraordinary stimulus measures from the Federal Reserve, and investors will be looking at company forecasts to gauge whether the fundamentals are strong enough to keep stocks climbing higher, said Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey.
"The rally will be confirmed if earnings can stay strong and if companies can continue to thrive even as government spending is reduced, and I think it will falter if it proves (companies) are unable to do so," said Meckler.
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That uncertainty could leave investors wary of taking much risk in a market that has accelerated to record levels in recent months. For the year, the S&P 500 is up more than 9 percent, while the Dow has gained more than 11 percent.
S&P 500 futures edged up 3.1 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 rose 13 points, while Nasdaq 100 futures added 8.5 points.
Alcoa Inc , the first Dow component to release results, reported a higher quarterly profit but lower-than-expected revenue after the bell on Monday. Shares of the largest U.S. aluminum producer were down 1.1 percent at $8.30 in premarket trading.
Data out of China overnight showed annual consumer inflation cooled last month. The figures led to expectations there would be less pressure to tighten policy, giving policymakers room to support the nascent recovery in the world's second-largest economy.
In economic reports, investors awaited U.S. wholesale inventories, due at 10 a.m. (1400 GMT). Economists in a Reuters survey forecast inventories to rise 0.5 percent in February versus an increase of 1.2 percent in January.
(Editing by Nick Zieminski)