Stock futures point up as Moody's says U.S. rating safe

Business Update: Asia tumbles
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By Leah Schnurr
NEW YORK (Reuters) - Wall Street was set to rise at the open on Tuesday, the day after the worst one-day loss in two months, as Moody's Investors Service said the U.S. government was not in danger of losing its top rating.
Moody's said the United States' Aaa credit rating was safe, but added it could be at risk if Washington is unable to bring public debt back on a downward trajectory.
Investors are jittery that triple A-rated governments such as the U.S. and Britain could face credit rating downgrades as they borrow heavily to fund efforts to pull out of recession.
"We're going to get the opportunity to look at things in a fashion that may resemble more of a 'Where are the opportunities', versus 'How quickly can I get out of stocks?'" said Arthur Hogan, chief market analyst at Jefferies & Co in Boston.
S&P 500 futures rose 3.80 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 climbed 16 points, and Nasdaq 100 futures added 4 points.
Hogan said defensive stocks could lead as investors shift into companies that are perceived as better able to weather the economic storm.
Among economic data on tap, the National Association of Realtors will release existing home sales for May, while the Federal Reserve Bank of Richmond will announce June indexes on area manufacturing and service sectors.
The Federal Open Market Committee begins a two-day meeting on interest-rate policy, and bond traders are watching for any changes to the central bank's $300 billion Treasury bond purchasing plan and the economic outlook.
Worries that a recovery will be tepid has caused stocks to pull back lately, and analysts will look at the day's data to see if the economy is stabilizing. Stocks could also get a lift as investors search for bargains after indexes saw their worst day since April 20.
The broad S&P 500 dropped back into negative territory for the year on Monday as investors reconsidered the health of the economy and grew nervous about the possibility of a correction after a three-month rally.
Though the S&P is up 32 percent from March's 12-year low, it has eased off a gain of as much as 40 percent.
Shares of Starbucks Corp (SBUX.O) rose 2.3 percent to $14.02 after Robert W. Baird upgraded the stock to "outperform" from "neutral."
A U.S. Treasury auction later in the day will be watched for how successfully the new paper will be absorbed by the market. The auction of $40 billion in two-year notes is part of a total of $104 billion in new issuance this week, the largest single-week amount of debt sales.
(Reporting by Leah Schnurr; editing by Jeffrey Benkoe)

Source: Reuters