Feb. 24 (Bloomberg) -- U.S. stock futures advanced after yesterday’s slump left the Standard & Poor’s 500 Index valued at the cheapest relative to earnings since 1985 and Home Depot Inc. reported profit that beat analysts’ estimates.

Home Depot, the world’s largest home-improvement retailer, climbed 2.7 percent in German trading. JPMorgan Chase & Co. rose 2.8 percent as the second-biggest U.S. bank cut its dividend by 87 percent, aiming to protect the lender even if the economy deteriorates “significantly.”

Futures on the S&P 500 expiring in March added 0.9 percent to 751.8 as of 11:13 a.m. in London. Dow Jones Industrial Average futures gained 0.8 percent to 7,175, while Nasdaq-100 Index futures added 0.5 percent to 1,141.75.

The S&P 500 is trading at 10.18 times the earnings of its companies after yesterday falling to 743.33, the lowest level since April 1997. JPMorgan strategist Thomas Lee issued a “trading buy” recommendation on the index, with a “short- term” target of 800.

“We went too low, too fast,” said Claudio Meiger, who manages about $100 million at Basel, Switzerland-based CIC Schweiz AG. “There is still a lot of uncertainty. Obama is doing everything he can and the market is showing little reaction. We need to hear something concrete from him today.”

President Barack Obama is gambling he can dispel the cloud of uncertainty that has driven bank shares to a two-decade low by subjecting lenders to rigorous reviews and reviving the market for their toxic assets. Officials will begin so-called stress tests of about 20 of the nation’s largest banks tomorrow with the aim of ensuring they have sufficient capital to withstand the toughest of economic times.

Asia, Europe

Stocks in Asia and Europe dropped today as the deepening recession erodes earnings. The MSCI Asia Pacific Index slid 1.8 percent, while the Dow Jones Stoxx 600 Index fell 1.4 percent.

A Conference Board report may show consumer confidence declined this month to 35, a record low, signaling spending will slump further as unemployment climbs, according to a Bloomberg survey of economists. Separate data will probably show the drop in home values accelerated in December. Both reports are due at 10 a.m. in Washington.

JPMorgan advanced 2.8 percent to $20.05. The bank slashed its dividend by 87 percent to 5 cents and said it plans to maintain that level “for the time being.”

Citigroup Inc. gained 0.9 percent to $2.16, after climbing 9.7 percent yesterday. Bank of America Corp. increased 1.5 percent to $3.97.

Bernanke Hearing

Federal Reserve Chairman Ben S. Bernanke may today be questioned about efforts to combat the credit crisis in a Senate Banking Committee hearing in Washington.

Home Depot climbed 2.7 percent to $19.22 as the company reported break-even earnings per share from continuing operations. Profit excluding items was 19 cents, compared with the consensus estimate of 15 cents.

Nordstrom Inc. will probably be active. The U.S. department- store chain with more than 100 namesake locations jumped in late New York trading after quarterly net income exceeded analysts’ estimates. The company also forecast a profit for the current year. Nordstrom shares didn’t trade in Europe.

American International Group Inc. declined 7.5 percent to 49 cents. The insurer bailed out by the U.S. may restructure its $150 billion rescue package for a second time in four months as the recession and slumping stock markets cut the value of its assets.

Separately, AIG received bids from MetLife Inc. and Axa SA for a life-insurance unit spanning more than 50 countries, a sale that may mark the biggest step yet in the company’s dismantling, said three people familiar with the situation.

Peter Stack, a spokesman for New York-based MetLife, declined to comment, as did Christina Pretto of New York-based AIG and Emmanuel Touzeau of Paris-based Axa.

To contact the reporter on this story: Daniela Silberstein in Zurich at dsilberstei2@bloomberg.net.

Last Updated: February 24, 2009 06:21 EST