Wall Street set to bounce on stimulus and mortgage plan

NEW YORK (Reuters) - Stock index futures signaled Wall Street was likely to rise at the open on Friday, with sentiment buoyed by expectations of the passage of a $789 billion stimulus package to jolt the economy out of recession.

Additionally, investors were heartened by news on Thursday that the Obama administration was creating a plan to subsidize mortgage payments for troubled homeowners.

The stimulus, which the U.S. Congress is due to vote on Friday, includes infrastructure spending that could be a boon for industrial companies such as Caterpillar Inc , whose stock rose 1.2 percent to $31.40 in thin volume.

In corporate earnings news, PepsiCo Inc's quarterly profit met estimates but looking ahead, the maker of Pepsi-Cola drinks and Frito-Lay snacks forecasts pressure from a stronger dollar.

On the economic data front, the Reuters/University of Michigan U.S. consumer sentiment report for February is due at 9:55 a.m. EST, with the main index expected to ease to 61.0 from 61.2.

"The market really is looking for any sign of positive news, anything it can hang its hat on to get some momentum," said Dean Barber, president of investment firm Barber Financial Group in Kansas City. "You are going to see some impact from the stimulus, but I'm afraid it's not going to be enough."

S&P 500 futures rose 2.70 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 climbed 12 points, and Nasdaq 100 futures gained 6.25 points.

On Thursday, U.S. stocks narrowly averted a slide to their November bear market low after Reuters reported the Obama administration was working on a program to subsidize mortgage payments for troubled homeowners, sparking a huge market turnaround.

Investors are on the lookout for confirmation and details about when and how such a plan would be implemented, added Barber.

With its vote on Friday, Congress is expected to pass the $789 billion package of economic stimulus measures aimed at unleashing large spending and tax cuts to help dig the economy out of a 14-month recession.

Approval of the emergency measures by the Democratic-controlled House of Representatives and Senate would give President Barack Obama a political victory, but fall short of his goal of broad Republican backing.

(Reporting by Ellis Mnyandu, Editing by Chizu Nomiyama)