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Stock futures rise sharply; Citigroup beats estimates

U.S. stock-index futures indicated a higher open on Monday, as Citigroup reported quarterly earnings and revenue that beat expectations.

Citigroup shares climbed in early New York trading after the bank reported second-quarter earnings excluding items of $1.24 a share on $19.34 billion in revenue. Analysts had expected the company to report earnings of $1.05 a share on $18.93 billion in sales.

Will earnings tell the story markets need to hear?

While a number of the banks are expected to post big declines, the overall trend for second-quarter earnings across the U.S. is seen growing at a fairly healthy 6-percent pace. Analysts will, however, be watching for clues from companies about their outlook on the U.S economy.

Concerns about growth were heightened by gross domestic product (GDP) data which revealed the U.S. economy contracted at a much steeper pace than previously estimated in the first quarter. GDP fell at a 2.9 percent annual rate - the economy's worst performance in five years.

Read MoreYellen's 'dovishstare' may crack at testimony

An economic slowdown could have two important implications for monetary policy, according to Bank of Tokyo-Mitsubishi's Lee Hardman.

"Firstly, there may now be less economic slack than estimated by the Fed arguing in favor of earlier rate hikes," he said in a note.

Read MoreDon't get too comfortable with low bond yields

"Secondly, the neutral policy rate will also likely be lowered implying that the Fed may need to raise the Fed funds rate by less. The Fed's estimate of the longer-run Fed funds rate has already been lowered to 3.75 percent from 4.00 percent at the end of last year."

On the data front, there are no major releases due Monday, with eyes likely to turn to U.S. Federal Reserve Chair Janet Yellen's testimony on monetary policy to Congress, which begins on Tuesday.

"There seems no reason, however, to expect her to deviate from her recent dovish tone, despite the firmer data seen of late, not least in the labor market," Chris Scicluna, head of economic research at Daiwa Capital Markets, said in a note.

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