Stock index futures rose on Tuesday, a day after the S&P 500 hit its highest closing level in eight months, after Caterpillar Inc posted stronger-than-expected quarterly results.

Shares of Caterpillar, a Dow component, rose 9 percent in early trade after the machinery maker reported second-quarter earnings and raised its full-year outlook.

The better-than-forecast results from Caterpillar followed similar upbeat postings from chemicals company DuPont Co and drug maker Merck & Co , which investors took as a sign that a recent stock rally had a healthy footing.

The market is looking for incremental news to hold on to recent gains, according to Art Hogan, chief market analyst at Jefferies & Co in Boston.

Investors will also closely watch testimony on the economic outlook and monetary policy from Federal Reserve chairman Ben Bernanke, expected at 10 a.m. EST.

Everyone knows we need to exit the monetary policy that we're currently using before (rampant) inflation comes upon us, but we don't want to think that is going to happen before we've actually gotten a stimulated economy, Jefferies' Hogan said.

It's going to be a balancing act today for Bernanke.

On the economic front, U.S. chain store sales rose 0.5 percent last week compared with the previous week as tracked by the ICSC and Goldman Sachs.

Redbook is set to release its Retail Sales Index for July versus June at 8:55 a.m. EST.

S&P 500 futures were up 3.5 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 41 points and Nasdaq 100 futures gained 3 points.

After the closing bell on Monday, chipmaker Texas Instruments Inc posted a stronger-than-expected operating second-quarter profit, but its stock slipped 1.1 percent to $23.35.

U.S. stocks jumped on Monday, driving the Standard & Poor's 500 Index <.SPX> to an eight-month closing high. The Dow Jones industrial average <.DJI> shot up 104.21 points, or 1.2 percent, the S&P gained 10.75 points, or 1.1 percent and the Nasdaq Composite Index <.IXIC> rose 22.68 points, or 1.2 percent.

(Editing by Padraic Cassidy)

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