new York 08 07, 2012, 18:50 IST
Wall Street was on track to open higher for a third day on Tuesday bolstered by expectations the European Central Bank will act soon to contain the bloc's credit crisis.
Spanish benchmark 10-year yields ticked down 5 basis points but were still near the unsustainable 7 percent level, underscoring the cautious tone in a market that has been previously disappointed by lack of coordination among euro zone officials.
Investors are also betting a larger-than-expected fall in German industrial orders in June will underscore the importance of quick action from the ECB.
The softening data "is going to force the ECB to take action and is probably going to mean more Fed stimulus," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.
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Despite worries over European and U.S. economies, the S&P 500 index is up 10.9 percent so far this year and could hit 1,400 Tuesday for the first time since early May. Yield-hungry investors have kept buying stocks as U.S. and German government bond prices soar and yields hit historic lows.
Even as Dallas Federal Reserve president Richard Fisher told Reuters on Monday new steps by the Fed to stimulate the economy so close to a presidential election would be a mistake, Boston Fed president Eric Rosengren said in a New York Times interview the Fed should expand its holdings of mortgage bonds and Treasury securities until it is satisfied with the health of the economy.
"Feds are outlining a plan that they are leaning towards more stimulus," said Rockwell's Cardillo. "When you have Fed members openly say it, it is a good, educated guess that that is the road map they are laying out."
Equity markets have rallied since Friday on hopes the ECB will start buying Italian and Spanish debt in an effort to stabilize the bloc's credit crisis and protect the euro, even as no details on the bank's course of action have been made public.
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S&P 500 futures rose 6.4 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 41 points, and Nasdaq 100 futures added 19 points.
European stock markets <.FTEU3> rose 0.5 percent despite pressure from bank stocks. Standard Chartered
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U.S. stocks closed at three-month highs on Monday, extending last week's rally on the hope for more assistance for the troubled euro zone.