* Home Depot Q2 profit tops expectation, outlook raised
* Housing starts, producer prices on tap
* Futures up: Dow 63 pts, S&P 500 5.8 pts, Nasdaq 9.75 pts
* For up-to-the-minute market news click []
(Updates with context on S&P 500)
By Edward Krudy
NEW YORK, Aug 18 (Reuters) - U.S. stock index futures rose
on Tuesday, rebounding from a steep drop the previous session,
ahead of data expected to show housing starts rose to their
highest level in eight months.
Home Depot Inc <HD.N>, the largest U.S. home improvement
chain, reported better-than-expected quarterly profit, helped
by cost cutting, sending its shares up 3.4 percent to $27.01 in
premarket trades. A disappointing outlook from rival Lowe's Cos
Inc <LOW.N> the previous day helped push equities to their
worst loss in seven weeks on Monday. (For details, see
[])
The housing data comes as investors seek hints that a
nascent housing recovery continues to gather steam. Fixing the
U.S. housing market, where the financial crisis originated, is
seen as a key step in restoring the economy to health.
Economists forecast that housing starts increased to a
seasonally adjusted annual rate of 600,000 units in July after
rising to 582,000 units in June, according to a Reuters survey.
It would be the third straight monthly increase.
Also at 8:30 a.m. (12:30 GMT), the U.S. Labor Department
releases the producer price index for July, which is expected
to register a decline of 0.3 percent after jumping twice as
much as expected in June to 1.8 percent on rising energy
prices.
"The real mover on the day will probably be housing starts.
Any strong number there will obviously add to positive
sentiment in the housing market that things are beginning to
stabilize," said Peter Cardillo, chief market economist at
Avalon Partners in New York.
"Everyone is singing to the same tune that the correction
is finally here. I don't subscribe to that," Cardillo said. "I
think what we've gone through over the past few days is a bit
of a pullback from a very overbought situation."
S&P 500 futures <SPc1> rose 5.8 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 <DJc1> rose 63
points, and Nasdaq 100 futures <NDc1> added 9.75 points.
Drug wholesaler Cardinal Health Inc <CAH.N> shares rose 1.9
percent to $34.00 in light premarket trade after the company
beefed up its full-year guidance. For more, see
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Investors will be looking for a repeat of that when the No.
2 U.S. retailer Target Corp <TGT.N> reports quarterly results.
Despite falling sales, the discount retailer has said that it
has been able to protect margins by keeping down inventory.
The rise in futures mirrored a recovery in global indexes
after a broad decline Monday. Japan's Nikkei <> closed up
0.2 percent, while in Europe the pan-European FTSEurofirst 300
<> index of top shares rose 1 percent.
The broad based S&P 500 index has rallied nearly 50 percent
since early March. The size of move has led many investors to
expect a significant pullback heading out of the summer months.
After the market closes, Hewlett-Packard Co <HPQ.N> will
report quarterly earnings that could jolt technology portfolios
if there are signs of improved enterprise demand.
(Reporting by Edward Krudy; Editing by Padraic Cassidy)
