US STOCKS-Futures up after Yellen tapped as next Fed chief

Reuters

* President Obama to nominate Yellen as Fed chair Wed

* Alcoa rises, Yum falls after earnings

* Futures up: Dow 43 pts, S&P 6 pts, Nasdaq 10.5 pts

By Chuck Mikolajczak

NEW YORK, Oct 9 (Reuters) - U.S. stock index futures rose onWednesday, indicating the S&P 500 may rebound from Tuesday'sdrop - its worst since August - after Janet Yellen was picked asthe next chairman of the U.S. Federal Reserve.

* U.S. President Barack Obama will nominate Fed number twoYellen on Wednesday. Investors expect her to tread carefully inwinding down economic stimulus, and to provide continuity withthe policies established under Fed Chairman Ben Bernanke, whosesecond term is due to expire on Jan. 31.

* The S&P 500 dropped 1.2 percent on Tuesday, itsworst decline since Aug. 27, sending the benchmark index to itslowest since Sept. 6 as traders cashed in gains in some of theyear's best performers.

* In Washington, Obama said he would not hold talks on waysto end the fiscal impasse while under threat from conservativeRepublicans, but agreed to discuss anything, including hishealthcare plan, if they restore government funding and raisethe debt limit.

* The crisis in Washington threatens to damage the fiscalstanding of the U.S. and to derail its economic recovery.

* S&P 500 futures rose 6 points and were above fairvalue, a formula that evaluates pricing by taking into accountinterest rates, dividends and time to expiration on thecontract. Dow Jones industrial average futures gained 43points and Nasdaq 100 futures added 10.5 points.

* Alcoa Inc climbed 3 percent to $8.18 in premarkettrading after the aluminum producer reported better thanexpected earnings, as strength at the unit that sells auto partsand other complex items helped offset lower metal prices.

* Costco Wholesale Corp posted a 1 percent rise inquarterly profit and a three percent increase in its same-storesales for the month of September.

* Yum! Brands Inc slumped 7.2 percent to $66.50 inlight premarket trading after the KFC parent warned it will takelonger than expected for its China restaurant sales to rebound,delaying a recovery in the market that accounts for more thanhalf of the company's overall operating profit.

* According to Thomson Reuters data, third-quarter earningsare expected to grow 4.3 percent, and revenue 3 percent.

* European shares steadied, with one-month lows attractingbuyers and with investors balancing the continued U.S. fiscaldeadlock against expectations of continuity from the new FederalReserve head.

* Asian shares sagged as the U.S. budget deadlock chippedaway at investors' confidence that a deal would be reachedbefore a mid-October deadline to avoid a historic debt default.

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