Wall St set for flat open after data, Fed minutes on tap

By Chuck Mikolajczak

NEW YORK (Reuters) - U.S. stocks were poised for a flat open on Wednesday as data showed the economy continues to show modest improvement before the minutes from the Federal Open Market Committee's January meeting later in the session.

Groundbreaking to build new U.S. homes fell 8.5 percent in January but new permits for construction rose to a 4 1/2-year high while producer prices rose in January for the first time in four months.

The data should enable the Fed to maintain its easy monetary policy in its efforts to stimulate the economy.

Later in the session, investors will look to the minutes from the Fed's January meeting for any indication as to how long the current monetary policy will remain in effect.

"It's hard in any given data point to take a strong conclusion that we are moving dramatically forward, but over time, clearly things are getting better," said Robert Lutts, chief investment officer at Cabot Money Management in Salem, Massachusetts.

Lutts described an economy that was addicted to stimulus.

"The bottom line is the economy is on heroin today and we will at one time move to a diluted form of heroin, but it's very important for people to remember we are still on an unbelievably aggressive, never-seen-before accommodative policy and this economy is going to improve."

U.S. stocks moved closer to all-time highs on Tuesday, as the ongoing flurry of merger activity to start the year has helped protect equities from a pullback.

The S&P 500 is up 7.4 percent for the year, fueled by legislators' ability to sidestep an automatic implementation of spending cuts on tax hikes on January 1, better-than-expected corporate earnings and modestly improving economic data that has been tepid enough for the Fed to maintain its stimulus policy.

S&P 500 futures added 0.2 points and were about even fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures gained 6 points, and Nasdaq 100 futures rose 0.75 point.

U.S. oil and gas producer Devon Energy Corp reported a fourth-quarter loss as it wrote down the value of its assets by $896 million due to weak gas prices.

Toll Brothers Inc lost 3 percent to $35.80 in premarket trade after the largest luxury homebuilder in the United States, reported first-quarter results well below analysts' estimates.

SodaStream dropped 3.7 percent to $50.50 in premarket after the seller of home carbonated drink maker machines posted fourth-quarter earnings and provided a 2013 outlook.

According to Thomson Reuters data through Tuesday morning, of the 391 companies in the S&P 500 that have reported results, 70.1 percent have exceeded analysts' expectations, compared with a 62 percent average since 1994 and 65 percent over the past four quarters.

Fourth-quarter earnings for S&P 500 companies are estimated to have risen 5.6 percent, according to the data, above a 1.9 percent forecast at the start of the earnings season.

(Reporting by Chuck Mikolajczak; Editing by Chizu Nomiyama and Nick Zieminski)