Wall Street set to edge higher after housing data

NEW YORK -

Wall Street looked set to edge higher on Wednesday as positive trends in the housing market offset a cautious outlook from 3M Co, but gains were slight with few other catalysts to drive stocks after the recent central bank-inspired equity rally.

Industrial conglomerate 3M Co was the latest major U.S. company after FedEx to caution about the economic outlook. 3M said the "economic environment has changed" since the company adopted its long-term 7-8 pct revenue growth target, and it now views that range as a "stretch target". The shares dropped 1 percent premarket.

Housing starts rose less than expected in August as groundbreaking on multifamily home projects fell, but the trend continued to point to a turnaround in the housing market. The reports come as investors look for improving economic data to help bolster a 7 percent rally since early August that was largely driven by action from central banks.

"The market is holding up here at highs and that's probably what we're going to do this week," said Frank Lesh, a futures analyst and broker at FuturePath Trading LLC in Chicago. "I don't see any big selloff coming, just some range trading and some consolidation."

S&P 500 futures rose 2.7 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 rose 22 points, and Nasdaq 100 futures added 6 points.

"When you look at the weeks that preceded this, we really had massive moves on a back-to-back basis and it's not unusual to see this type of consolidation where we trade sideways for a few days, at least until we get a new catalyst," said Art Hogan, managing director of Lazard Capital Markets in New York.

The recent surge in stock prices has led to an increase in bullish sentiment among U.S. investors. The proportion of equity bulls climbed to 54.2 percent from 51.1 percent a week ago and posted its third straight reading above 50, according to a weekly survey by Investors Intelligence. Some investors see high levels of enthusiasm as a warning that prices may be topping.

Microsoft Corp raised its dividend by 15 percent on Tuesday, marking a slowdown in the growth in payouts to investors after a year marked by a downturn in computer sales and a large write-off for a failed acquisition. The shares fell 0.2 percent premarket.

Japan's Nikkei <.N225> share average hit a four-month closing high on Wednesday after Tokyo's central bank eased monetary policy to bolster an economy struggling with sluggish global demand and fallout from a territorial dispute with China.

General Mills Inc reported higher quarterly earnings on Wednesday, helped by recent acquisitions, and stood by its full-year outlook. The shares rose 1.2 percent to $39.77 in premarket trade.

(Reporting by Edward Krudy; Editing by Kenneth Barry)