* Hopes of action on banks and economy boost sentiment
* Fed rate statement due around 2.15 p.m. (1915 GMT)
* House of Representatives to vote on stimulus package
* S&P 500 futures up 22.30 points, Dow futures up 154,
Nasdaq futures up 28 points
* For up-to-the-minute market news, click []
(Adds details)
By Leah Schnurr
NEW YORK, Jan 28 (Reuters) - Wall Street was set for a
higher open on Wednesday on optimism the new administration was
moving quickly to stabilize the ailing banking sector and as
lawmakers get ready to vote on a stimulus package to boost the
ailing economy.
Focus was also on the Federal Reserve's monetary
policy-setting Federal Open Market Committee that began a
two-day policy meeting on Tuesday. A statement will be released
in the afternoon and investors will be watching for signals of
any nonconventional methods of fighting the credit crisis.
Financial shares rose on hopes of help for the battered
sector after a Bloomberg report that the Federal Deposit
Insurance Corp is aiming to take control of a "bad bank", to be
set up by the government to mop up banks' toxic assets.
For details see [].
The Financial Select Sector SPDR <XLF.P> jumped 10 percent,
while Citigroup <C.N> was up more than 22 percent to $4.35 and
Bank of America <BAC.N> gained 20.2 percent to $7.81. Since
hitting a 14-year low last week, financials have staged a rally
outperforming the broad S&P 500.
The House of Representatives plans to vote later in the day
on President Barack Obama's $825 billion package to stem the
deterioration in the U.S. economy. Most House Republicans were
expected to oppose the proposal but Democrats were confident
they had the votes to push it through. [].
"The market is heading higher today on hopes that a 'bad
bank/good bank' plan will help resolve the banking crisis,"
said Peter Cardillo, chief market economist at Avalon Partners
in New York, adding:
"We're moving higher on the hopes the problems of the
industry might find a solution, and, of course, the quick
passage of the Obama stimulus package."
S&P 500 futures <SPc1> rose 22.30 points and were above
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 <DJc1> climbed
154 points, and Nasdaq 100 <NDc1> futures added 28.00 points.
Shares of Wells Fargo & Co <WFC.N> jumped 20.1 percent to
$19.44 after it reported a quarterly loss but maintained its
dividend and said it has no plans to request new capital from
the government's financial aid program. [].
Stocks rose on Tuesday as markets were encouraged by some
standouts on the earnings front. It was the third straight up
day for the S&P 500 and the Nasdaq.
Some better-than-expected quarterly results in the midst of
a bleak earnings season continued to boost sentiment on
Wednesday.
Shares of Yahoo Inc <YHOO.O> were up 4.9 percent at $11.90
in premarket action after its quarterly results beat analysts'
expectations after Tuesday's close, helped by cost cuts in a
weak advertising market. [].
Investors are hopeful for quick action to prevent the U.S.
economy, which has been in recession for over a year, from
worsening.
House Democrats are seeking a final bill on the stimulus
package for Obama to sign into law by mid-February, while new
Treasury secretary Tim Geithner is expected to propose new
efforts to unclog frozen credit markets within the next two
weeks.
(Editing by James Dalgleish)
