Stocks were set for a bounce at Tuesday's open as an estimate of higher profit from manufacturer 3M Co. helped buoy investor sentiment after Monday's steep market decline. However, nagging security fears could keep a lid on gains. "It looks like we are having a little bit of a bounce," said Peter Cardillo, chief market analyst at SW Bach and Co. "But the big factor remains the fear factor that is rising within market circles based on the latest terrorist events. When emotions ride high in the market place anything can happen." Investors will tune in to the Federal Reserve's monetary policy meeting for hints on how the central bank views the outlook for the U.S. economy and jobs, but no change in borrowing costs is expected. A statement from the Fed is expected after Tuesday's meeting, around 2:15 p.m. (1915 GMT) Equity futures pointed to a higher open on Wall Street. Futures rose 4.6 points for the S&P 500, climbed 48 points for the Dow industrials and advanced 7 points for the Nasdaq 100. 3M, seen as a bellwether for American industry, may help prop up the market after the Dow component said after Monday's close that results would be boosted by better demand and the weaker dollar. Shares in the maker of Post-It notes and Scotch tape closed at $74.87. Investors overseas were subdued on Tuesday on security fears after the Madrid bombings and caution before a U.S. interest rate decision.
European bourses were helped by a merger involving French bank BNP Paribas. Despite weak German economic data, they escaped the losses sustained earlier in Tokyo and New York. BNP Paribas said its U.S. arm, BancWest, would buy Fargo, North Dakota-based Community First Bankshares for $1.2 billion, pushing the European company deeper into U.S. retail banking. Earlier Tokyo stocks closed lower, with tech stocks hit by concerns that security worries would hurt leading economies. Weekly reports on U.S. store sales are due on Tuesday and the markets will look to see whether consumers' tax refunds are helping to support sales at U.S. chain stores. A report on housing starts is due at 8:30 a.m. (1330 GMT) Economists polled by estimated that starts rose to a seasonally adjusted annualized rate of 1.930 million in February from a 1.903 million rate in January. Although the U.S. central bank is widely expected to leave U.S. interest rates at 46-year lows at Tuesday's meeting, investors will be keen to hear the Fed's wording of its statement for any hints on a change in the likely timing of any rise in interest rates. With growth in nonfarm payrolls weak, the central bank is expected to repeat its promise that it can remain "patient" before starting to raise the 1 percent federal funds rate from its lowest level since 1958. On Monday, U.S. stocks were battered to fresh lows for the year amid signs that al Qaeda may have been behind the Madrid bombings that killed 200 people, spurring worries of more violence.
The Dow Jones industrial average <.DJI> sank 1.3 percent to 10,102.89 points, while the technology-studded Nasdaq Composite <.IXIC> fell 2.3 percent to end at 1,939.20 points. The Dow is now down about 6 percent from its closing high set earlier this year, while the Nasdaq is down about 10 percent from its closing high. The S&P 500 is down about 5 percent from its high. Each of the major indexes are still in negative territory for the year.///