By Ryan Vlastelica
NEW YORK (Reuters) - U.S. stock index futures pointed to a higher open on Tuesday, indicating equities would partially rebound from a steep drop over Italian election results as investors saw opportunities to buy beaten-down shares.
Major indexes fell more than 1 percent on Monday, with the S&P 500 having its biggest daily drop since November as investors fretted that if Italy does not undertake reforms, the euro zone could once again be destabilized. European equities, which closed before the results on Monday, fell 1.1 percent.
Groups in Italy opposed to economic reforms posted a strong showing in the recent election, resulting in a political deadlock with a comedian's protest party leading the poll and no group securing a clear majority in parliament.
"We've gone to an environment of political stability to instability, and until we get some type of clarity over who is in charge, which could take days, the market will have renewed concerns," said Art Hogan, managing director of Lazard Capital Markets in New York.
Still, market participants speculated a coalition government would eventually emerge in Italy and ease worries about a new euro zone debt crisis.
The rise in U.S. futures suggested the recent trend of investors buying on dips would continue. Last week, concerns the Fed might roll back its stimulus efforts earlier than expected prompted a sharp two-day decline, though equities recovered most of the lost ground by the end of the week.
"Investors are taking advantage of the drop, and once some kind of coalition government is formed most of our concerns will be put to rest," Hogan said.
Dow component Home Depot Inc
Macy's Inc
S&P 500 futures rose 6 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 added 43 points and Nasdaq 100 futures rose 7.25 points.
For the benchmark S&P 500 index, 1,500 will be watched as a key level after the index closed below it on Monday for the first time since February 4, with selling accelerating after falling below it. An inability to break back above it could portend further losses.
Financial shares may be among the most volatile, as the group is closely tied to the pace of global economic growth. Morgan Stanley
Investors will pay close attention to the first of two days of congressional testimony by Federal Reserve Chairman Ben Bernanke for insight into the central bank's view of the economy, as well as the outlook for its bond buying program. Last week, equities fell on concerns the program might end sooner than had been anticipated.
Bernanke appears before the Senate Banking Committee at 10 a.m. (1500 GMT).
Among economic reports, home prices rose 0.9 percent in December, according to the Standard & Poor's/Case-Shiller index. That was more than the 0.5 percent gain expected. Futures showed little impact from the data.
January consumer confidence is scheduled for 10 a.m. and is seen rising to 61.0 from 58.6 in the previous month. New-home sales for January also are due at 10 a.m.
The S&P remains 4.3 percent higher on the year, helped by strong corporate earnings, as well as a backdrop of accommodative monetary policy from the Fed.
With 83 percent of the S&P 500 having reported so far, 69 percent beat profit expectations, compared with a 62 percent average since 1994 and 65 percent over the past four quarters, according to Thomson Reuters data. Fourth-quarter S&P earnings are seen having risen 6 percent, above a 1.9 percent forecast at the start of the earnings season.
(Editing by Chizu Nomiyama and Kenneth Barry)
