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Futures Hold Gains After Case-Shiller Home Price Index

U.S. stock market futures held modest gains Wednesday following a better-then-expected Case-Shiller home price index and as President Obama cut short his vacation in Hawaii to deal with the "fiscal cliff" negotiations just six days ahead of the deadline.

The S&P/Case Shiller home price index of 20 major cities rose 0.7 percent in October on a seasonally adjusted basis, topping expectations for a gain of 0.5 percent. And prices in the 20 cities jumped 4.3 percent from last year, beating forecasts for an increase of 4.0 percent.

Obama will return to Washington early on Thursday, according to the White House, to deal with the deadlocked talks between Democrats and Republicans on what to do with $600 billion in tax increases and automatic spending cuts, due to kick in on Jan. 1.

Wall Street has been increasingly worried that the two sides may not reach a deal in time. Art Cashin, director of floor operations for UBS, said such an outcome would result in a 95 percent chance of a U.S. recession next year.

The worries over the fiscal cliff and an extremely weak report on the holiday shopping season could put retail stocks under pressure.

Sales in the two months before Christmas rose just 0.7 compared to last year, the slowest rate of growth since 2008, according to the MasterCard Advisors Spending Pulse. Analysts had been expecting growth of 3 to 4 percent.

Amazon.com and Netflix were both slightly lower after an outage at an Amazon web service center impacted Netflix subscribers in the U.S., Canada, and Latin America on Christmas eve. Service was fully restored by Christmas day.

Stocks in Europe were closed for the Boxing Day holiday. In Asia, markets closed higher on thin volumes, with Japanese stocks rallying to hit nine-month highs on a weaker yen.

—By CNBC's JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)

Coming Up This Week:

WEDNESDAY: Richmond Fed mfg index
THURSDAY: Jobless claims, new home sales, consumer confidence, oil inventories, Kansas City Fed survey, Fed balance sheet, money supply
FRIDAY: Chicago PMI, pending home sales, natural gas inventories

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