US STOCKS-Market set to open up on Bear Stearns, Macy's

NEW YORK (Reuters) - U.S. stocks looked set to open higher Wednesday after Bear Stearns Cos. Inc. said the worst of its mortgage write-downs are behind it and retailer Macy's reported earnings that topped estimates.

In addition, government data showed a smaller-than-expected rise in U.S. producer prices for October, defusing worry about inflation, and an increase in retail sales for October that was in line with expectations.

The comments by Bear Stearns' chief operating officer at a conference eased worries about future losses in the financial sector.

The Macy's results follow a strong profit and outlook from Wal-Mart Stores Inc. a day earlier, which helped contribute to Tuesday's sharp stock rally that marked the Nasdaq's biggest gain in more than four years.

Bear Stearns rose 7 percent to $108 in pre-market trading. The investment bank also said it expects to write down $1.2 billion in the fourth-quarter and said it is making significant moves to cut costs.

"The real event is the Bear Stearns announcement, which revives confidence that the financial system will not implode. Until Goldman's remarks earlier this week, there was enormous fear that the investment banks were in serious trouble," said Michael Metz, chief investment strategist at Oppenheimer & Co., in New York.

S&P 500 futures gained 12.20 points and were above fair value, a formula to evaluate pricing taking into account interest rates, dividends and time to expiration on the contract.

Dow Jones industrial average futures gained 85 points, and Nasdaq 100 futures were up 29.25 points.

Shares of Macy's rose 1.8 percent to $31.21 before the bell. JC Penney Co Inc shares were up 1.5 percent at $48.80 after a $48.09 close on Tuesday. (Additional reporting by Jennifer Coogan; Editing by Kenneth Barry)