Futures point to modest gains on Fed hopes

NEW YORK (Reuters) - U.S. stock index futures pointed to slight gains at the open on Tuesday as investors were optimistic heading toward the close of a strong quarter.

Gains were limited, however, after a pessimistic outlook from Caterpillar Inc , the latest multinational company to warn that economic weakness could hurt its results, following FedEx Corp .

The heavy machinery maker cut its 2015 profit outlook, warning that weaker commodity prices would result in a bigger-than-expected decline in demand. Shares of the Dow component fell 1.8 percent to $89.22 in premarket trading.

"Caterpillar is another global-reaching firm that's speaking negatively to the pace of the economy, and with slowdowns in Europe and Asia this is something we should get used to," said Art Hogan, managing director of Lazard Capital Markets in New York.

In economic news, U.S. single-family home prices rose for a sixth month in a row in July, though the improvement was not as strong as expected, according to the S&P/Case Shiller index. Stock index futures showed little change after the data.

Equities have rallied in recent months on expectations of stimulus from central banks around the world, and announcements of easing earlier this month from the Federal Reserve and European Central Bank have kept the S&P 500 near multi-year highs despite some weak economic data.

San Francisco Fed President John Williams said on Monday he expected the central bank to expand its bond-buying program next year to more aggressively combat the unemployment rate. He also expects the program to end before the close of 2014.

"Monetary policy has been enough to offset a lot of what we've been worried about lately," Hogan said. "It is acting as a backstop for corporate warnings and Europe fears and keeping us higher in a historically weak month."

S&P 500 futures rose 3.9 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 added 32 points and Nasdaq 100 futures rose 11.75 points.

The S&P 500 is on track for a 7 percent gain for the quarter, a rally largely tied to central banks' actions to stimulate their economies. After those gains, many market participants are looking for new catalysts to keep pushing shares higher.

Analysts said investors are probably now participating in "window dressing," where fund managers add some of the latest outperformers to their portfolio.

Telecommunications shares are among the quarter's top performers. MetroPCS Communications is up almost 95 percent over the past three months, followed by Sprint Nextel Corp , up 75 percent. Google Inc is also a strong performer, climbing 29 percent in the quarter.

Data on September consumer confidence is on tap for 10 a.m. (1400 GMT) and is seen rising to 63 from last month's 60.6.

Paychex Inc reported a first-quarter profit that narrowly beat estimates, helped by higher revenue from its human resource services business. The stock fell 3.6 percent to $33.13 before the bell.

Red Hat Inc reported a lower-than-expected adjusted profit as costs rose, and lowered the top end of its full-year revenue outlook on slow growth in its services business. The stock lost 3.9 percent to $55.28 in premarket.

U.S. stocks closed flat on Monday as an index of German business sentiment declined for a fifth consecutive month in September, showing Europe's strongest economy was moving closer toward recession as the euro zone's debt crisis remains unresolved. Caterpillar's outlook further pressured sentiment going into the close.

(Editing by Kenneth Barry)