By Ellis Mnyandu
NEW YORK (Reuters) - Stock index futures rose on Tuesday, pointing to a partial rebound from Wall Street's worst slide in more than 20 years, as investors bet that Washington will work to revive a plan to stabilize the U.S. financial system.
Even though the House of Representatives rejected the proposed $700 billion rescue plan on Monday, investors still hope that leaders in Washington might work around any disagreements.
The surprise defeat of the plan rattled markets around the globe, with Asian stocks following Wall Street's Monday slide overnight, but European shares steadied on Tuesday, awaiting further news on the bailout plan.
President George W. Bush said he was disappointed that the House voted down the plan to mop up bad mortgage debts on the banks' balance sheets but said he would continue to confront the problem head-on.
Bush is scheduled to make a statement on the bailout plan at 8:45 a.m. before the market open.
"There's an overarching belief that at some point this week, whether it's Wednesday or Thursday, we'll get something passed by the House," said Arthur Hogan, chief market analyst at Jefferies & Co in Boston.
"At the same time, the market is coming to the realization that this rescue package, in whatever form it comes out, is not going to cure everything. It's not going to cure a slower economy or force banks to lend to each other. We're going to fix one problem but we're still in a slow economy."
S&P 500 futures rose 29.20 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 189 points and Nasdaq 100 futures added 26 points.
According to Thomson Reuters weekly 14-day relative strength chart data, the broader market -- as measured by the S&P 500 -- will start Tuesday's trading at its most oversold level since July 2002, right before the start of the last bull market.
Hogan said he expected gains to be tentative until there was clarity from Washington. He added bargain-hunting was likely to underpin the market on Tuesday. Trading may be light with many market participants away from their offices for the Jewish New Year holiday on Tuesday and Wednesday.
In economic news, the S&P/Case-Shiller Home Price Index for July is due at 9 a.m.. September's Chicago PMI, a measure of manufacturing activity in the U.S. Midwest, is due at 9:45 a.m.. The Conference Board's reading on consumer confidence in September is due at 10 a.m..
(Editing by Kenneth Barry)
