Indications: Stock futures rise on durable goods, Caterpillar

NEW YORK (MarketWatch) � U.S. stock futures gained Monday after equipment-maker Caterpillar Inc. reported a better-than-expected quarterly profit and orders for durable goods jumped in December.

Caterpillar CAT �shares climbed 2.1% in premarket trade after the blue-chip company reported fourth-quarter profit that beat expectations. Read: Caterpillar�s fourth-quarter profit drops 55%.

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Stock-index futures added to modest gains after the Commerce Department reported orders for big-ticket U.S. goods rose 4.6% last month.

S&P 500 Index futures SPH3 rose 2.5 points, or 0.2%, to 1,498.20, while futures on the Dow Jones Industrial Average DJH3 gained 30 points, or 0.2%, to 13,842. Nasdaq 100 futures NDH3 NDH3 rose 3.25 points, or 0.1%, to 2,731.25.

Wall Street rose Friday, with the S&P 500 SPX closing above the 1,500 level for the first time since 2007.

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Abby Joseph Cohen, senior investment strategist for Goldman Sachs, puts an optimistic spin on the federal budget deficit, explains why stocks are inexpensive and makes the case for investing in Bristol-Myers Squibb.

�Stocks are strong. The next point that needs to be addressed is that stocks are very extended in the short term and a light-volume pullback would do wonders to restore the health of this rally,� said Adam Sarhan, chief executive of New York-based Sarhan Capital, in a note.

Data points and the Fed

A stream of top-tier economic data, culminating Friday with the release of U.S. nonfarm payrolls and other employment figures for January, is on tap this week. The Federal Reserve concludes its first policy meeting of 2013 on Wednesday. See: Wall Street's 'Super Bowl' set to kick off.

Budget concerns may also be in the mix after Rep. Paul Ryan, chairman of the House Budget Committee and the 2012 Republican vice presidential nominee, said he expects steep automatic cuts in federal spending to take place March 1. Read about Ryan's comments.

QE3

No policy changes are expected from the Fed this week, but investors will be on the lookout for further clues to policy makers� assessment of the economic recovery. The U.S. central bank last year said it was committed to holding interest rates near zero as long as unemployment remained above 6.5% and inflation remained below 2.5%.

It�s less clear, however, what it would take to get the Fed to end its open-ended third round of quantitative easing, widely known as QE3, according to Philip Marey, senior U.S. strategist at Rabobank International.

Reuters Federal Reserve headquarters in Washington (2012 file photo).

Minutes of previous Fed meetings have highlighted a wide divergence of opinion over the potential time frame for the program. The liquidity boost provided by the Fed�s QE program has been credited with helping to lift stocks, commodities and other so-called risk assets in recent years.