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Futures Higher on Bank of Japan News

Stock index futures pointed to a higher open after the Bank of Japan cut interest ratesand pledged to keep rates at zero until prices stabilize.

Data showing a pick-up in the US housing marketfailed to soothe investors’ worries on the strength of the economic recovery on Monday, but the surprise move by the Bank of Japan offered some relief and helped before-hours sentiment.

Financial markets expect the Federal Reserve to embark on another round of asset buying to bolster a sluggish recovery as early as its November meeting. There are also calls within the Bank of England for further easing, although the bank has kept markets guessing on whether it will make that move.

In a speech on Monday evening in Rhode Island, Fed Chairman Ben Bernanke said the Fed's asset purchases had lowered borrowing costs and supported the economy, and more buying could further ease financial conditions.

But investors remained cautious ahead of corporate earnings season and the government's monthly jobs report, due out Friday.

Economic data due on Tuesday includes the September Institute of Supply Management’s non-manufacturing index, due at 10 a.m. The index, which measures the pace of growth in the services sector, is set to rise to 51.8 from 51.5 in August, according to Briefing.com.

Government advisers in Saskatchewan on Monday urged the province not to oppose a takeover, of Potash by BHP Billitonarguing that any possible China-based bid could harm Saskatchewan's economy.

Also in the spotlight is Home Depot , which was cut to "neutral" from "buy" by Goldman Sachs. Home Depot shares fell in pre-market trade.

Chevron said it would start buying back its own shares in the fourth quarter as part of a buyback program approved earlier by its board to repurchase between $500 million and $1 billion of its shares.

Walgreen shares are higher in pre-market trading after posting a stronger-than-expected rise in September same-store sales because of an uptick in pharmacy sales. Same-store sales rose 0.4 percent over the same month a year ago, while analysts had expected a 1.1 percent decline, according to Thomson Reuters.

Microsoft is planning to have a tablet computer by Christmas, although it's unclear whether it will be on sale by that time or who will make it. Speaking at the London School of Economics, Microsoft Chief Executive Steve Ballmer said: "You'll see new slates with Windows on them. You'll see them this Christmas," according to Reuters.

Ahead of this week’s IMF/World Bank meeting, the 16 nations that use the euro are urging China to let the value of its currency rise to help stimulate global economic growth. None of the world's economic powers wants a strong currency right now as a weaker currency provides a competitive advantage.

Jean-Claude Juncker of Luxembourg, the head of the euro group, wants to see a "broad-based appreciation" of the Chinese yuan against the dollar and other major currencies. He said he expressed the view at a meeting Tuesday with Chinese Prime Minister Wen Jiabao.

Also in Europe, Moody's warned on Tuesday that it may cut Ireland's credit rating again, pointing to the huge bill for cleaning up its banks announced last week, a weak economic recovery and rising borrowing costs.

A new business survey, which showed that the recovery of the euro zone's dominant service sector sagged in September, failed to dampen the mood. The data showed declines in Spain and Ireland offset resilient performances in Germany and France.

On Tap This Week:

TUESDAY: ISM non-manufacturing index; Intel CEO Otellini speaks; Earnings from Yum Brands
WEDNESDAY: Weekly mortgage applications; Challenger job-cut report; ADP employment report; weekly oil inventories; CTIA Wireless; Earnings from Costco and Monsanto
THURSDAY: Monthly chain store sales; BoE announcement; ECB announcement; Kansas City Fed Pres Hoenig speaks; Consumer credit; Mosaic shareholder meeting; Earnings from PepsiCo and Alcoa
FRIDAY: Monthly non-farm payroll; Wholesale trade; NY Comic Con; IMF, World Bank annual meetings

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