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Stocks set to open higher after sell-off...

By TIM PARADIS, AP Business Writer

Stocks were poised to open higher Wednesday following a massive worldwide sell-off Tuesday that rattled investor confidence but left fertile ground for bargain hunters.

The declines Tuesday, which began following a drop in the frothy stock markets of mainland China, naturally raised questions about whether a larger correction was in the offing. Overnight, stocks fell in most of Asia though the Shanghai Composite Index, whose nearly 9 percent drop set off the domino-effect selling, closed up nearly 4 percent Wednesday. Stocks were also off in Europe, but the declines were milder than on Tuesday.

Following the selloff that erased the U.S. major indexes' gains for the year, already important economic news and testimony from Federal Reserve Chief Ben Bernanke will take on a new urgency as investors try to determine whether stocks will regain their footing.

Futures signaled a higher opening. Futures for the Dow Jones industrials, which fell more than 400 points Tuesday, were higher by 54.24 points, while Standard & Poor's 500 index futures were higher by 5.94 points. Nasdaq composite index futures were higher by 10.52 points.

Preliminary figures on fourth-quarter gross domestic product are due before U.S. markets open. Investors expect the Commerce Department will show the economy grew at an annual rate of 2.2 percent, more than a percentage point below the initial estimate of 3.5 percent.

Figures are also due shortly after the market opens on new home sales for January and a report from the National Association of Purchasing Management-Chicago index of business conditions in the Midwest. The report is often viewed as a bellwether for the Institute for Supply Management's index of manufacturing activity for February, which is due Thursday. Weekly figures are also due on domestic crude inventories.

Bernanke is set to testify on Capitol Hill about the U.S. economy. His remarks follow comments from former Fed Chairman Alan Greenspan, who stirred concern about the health of the U.S. economy with a warning over the weekend that a recession could take hold later this year.

Concerns about the economy, which appear to have been brewing for much of the year following strong stock-market gains in 2006, loomed large in Tuesday's trading and aren't likely to fade Wednesday.