Stock futures up modestly ahead of home sales data

NEW YORK -- Investors are cautiously upbeat again after Monday's big sell-off.

Stock futures are edging higher early Tuesday ahead of the National Association of Realtors' report on May sales of existing homes. Economists surveyed by Reuters predict an increase of 2.8%, which would be a sign the troubled housing market is starting to mend.

The market's moves were modest, though, following the Dow's 201-point loss Monday — the index's worst daily drop in more than two months. Stocks fell Tuesday in Japan but were slightly higher by afternoon trading in Europe.

Later Tuesday, the Federal Reserve begins its two-day meeting on monetary policy. The Fed is widely expected to keep its key rate near zero, but investors are unsure how optimistic the policymakers will be in their economic assessment.

Another cause for caution is the Treasury Department's afternoon auction of $60 billion in two-year notes. Any evidence that demand for government debt is waning could give investors a scare. Treasury demand needs to stay strong for the government to finance its bailout and stimulus programs without significantly raising yields; Treasury yields affect borrowing rates for consumers.

Bond prices dipped in early trading Tuesday ahead of the afternoon auction. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.71% from 3.69% late Monday.

After selling off on Monday, crude oil was little changed, slipping 3 cents to $67.47 a barrel in premarket trading on the New York Mercantile Exchange.

The dollar was mixed against other major currencies. Gold prices rose.

Overseas, Japan's Nikkei stock average sank 2.8%. In afternoon trading, Britain's FTSE 100 rose 0.3%, Germany's DAX index rose 0.8%, and France's CAC-40 rose 0.1%.