U.S. Markets closed

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

* 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 on Wednesday, indicating the S&P 500 may rebound from Tuesday's drop - its worst since August - after Janet Yellen was picked as the next chairman of the U.S. Federal Reserve.

* U.S. President Barack Obama will nominate Fed number two Yellen on Wednesday. Investors expect her to tread carefully in winding down economic stimulus, and to provide continuity with the policies established under Fed Chairman Ben Bernanke, whose second term is due to expire on Jan. 31.

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

* In Washington, Obama said he would not hold talks on ways to end the fiscal impasse while under threat from conservative Republicans, but agreed to discuss anything, including his healthcare plan, if they restore government funding and raise the debt limit.

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

* S&P 500 futures rose 6 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 gained 43 points and Nasdaq 100 futures added 10.5 points.

* Alcoa Inc climbed 3 percent to $8.18 in premarket trading after the aluminum producer reported better than expected earnings, as strength at the unit that sells auto parts and other complex items helped offset lower metal prices.

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

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

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

* European shares steadied, with one-month lows attracting buyers and with investors balancing the continued U.S. fiscal deadlock against expectations of continuity from the new Federal Reserve head.

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