By Ryan Vlastelica

NEW YORK (Reuters) - Stock index futures rose modestly on Tuesday, indicating positive market momentum would persist as investors remain optimistic about the economic outlook.

Sentiment has improved since Federal Reserve officials reassured investors that the central bank's bond-buying stimulus policy wasn't ending imminently. However, the S&P 500 remains more than 3 percent below its record closing high.

"We're seeing a retracement of a sell-off that was based in fear, though the market will likely continue to be emotional," said Oliver Pursche, president of Gary Goldberg Financial Services in Suffern, New York.

William Dudley, the president of the New York Fed, will speak at 12:30 p.m. about national economic conditions. His comments will be closely scrutinized for clues about when the Fed might begin to scale back its quantitative easing.

May factory orders will be released at 10 a.m. by the government, and economists polled by Reuters expect a rise of 2 percent, twice the rate of the previous month.

Data on the Institute for Supply Management's New York regional business activity is also on tap for Tuesday, leading up to Friday's closely watched June payrolls report.

Wall Street has had a divided attitude toward U.S. data, as bullish reports sparked declines on concerns any sign of a strong economy will cause the Fed to move up the tapering its bond-buying program.

"Today's move will likely come down to whether we see a strong reaction to the data," Pursche said. "We'll likely be very unpredictable ahead of the payrolls report."

S&P 500 futures rose 4.5 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 added 26 points, and Nasdaq 100 futures were up 8.25 points.

Equities surged in the first half of the year, hitting a series of record highs before pulling back dramatically in June on concerns the Fed would begin reining in its stimulus, which helped fuel 2013's gains.

While stocks closed higher on Monday on strong manufacturing and construction data, they ended well off their highs of the session. The S&P lost more than half of its gains, a sign of investor caution. More volatility is expected as the economy eventually moves to a no-stimulus environment.

In corporate news, alcoholic beverage company Constellation Brands Inc fell 4 percent to $51.04 in premarket trading after the company reported first-quarter revenue that was below expectations.

Sources said Pfizer Inc and Novartis AG may make preliminary bids for Onyx Pharmaceuticals Inc . On Sunday, Onyx turned down a roughly $10 billion offer from Amgen Inc .

Zynga Inc rose 3.2 percent to $3.23 in premarket trading after naming Don Mattrick, the head of Microsoft's Xbox business, as its chief executive.

(Editing by Jeffrey Benkoe and Kenneth Barry)

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