After falling sharply in the previous session, stocks are likely to see some further downside in early trading on Tuesday. Earnings news will likely be the driving force in the session while investors await testimony from Treasury Secretary Geithner.

On the earnings front, drug giant Merck (MRK) reported first quarter results that fell year-over-year and came in below analyst estimates. The company reported net income of $1.43 billion, down more than 50 percent from $3.3 billion in the year-ago quarter.

Excluding restructuring charges and expenses related to its pending acquisition of Schering-Plough (SGP), Merck reported earnings of $0.74 per share compared to analyst estimates of $0.77 per share. The company also said its sales fell by a bigger than expected 8 percent

Looking forward, the company said it is reducing its guidance for full-year 2009 revenue to $23.2 billion to $23.7 billion. The company said it expects sales and earnings in the second half of the year to be stronger than in the first half.

Additionally, DuPont (DD) said its first quarter earnings attributable to common shareholders fell to $0.54 per share from $1.31 per share last year. Net sales fell to $6.87 billion from $8.58 billion. Analysts expected earnings of $0.52 per share on revenues of $7.74 billion.

The chemical giant also reduced its full year earnings guidance to $1.70 to $2.10 per share, citing difficult market conditions.

Meanwhile, Caterpillar (CAT), another Dow component, posted adjusted first-quarter results that crushed estimates. Excluding redundancy costs, the company reported a first quarter profit of $0.39 per share, down sharply year-over-year but well above analyst estimates of $0.04 per share.

In other news, Treasury Secretary Geithner will be facing a bombardment of questions revolving around his plans to shore up banks. Geithner is scheduled to testify before the Congressional Oversight Panel at 10 AM ET.

Stocks moved sharply lower over the course of the trading day on Monday, with the major averages giving back some ground after closing higher for six straight weeks. A negative reaction to the latest earnings news inspired traders to do some profit taking.

After showing a steep decline in morning trading, stocks drifted lower in the afternoon, but selling pressure had waned from earlier in the session. The Dow eventually closed down nearly 290 points after ending Friday's trading at a two-month closing high.

Crude oil futures are edging up $0.12 to $46 a barrel after slumping $4.45 to a 1-month low of $45.88 a barrel on Monday. Meanwhile, gold futures, which rose $19.60 to $887.50 an ounce yesterday, are currently up $4 at $891.50 an ounce.

On the currency front, the U.S. dollar is trading at 98.085 yen after it came under selling pressure on Monday, when it settled down at 97.888 yen. Against the euro, the dollar is trading at $1.2939.

In overseas trading, stock markets across the Asia-Pacific region closed mostly lower on Tuesday following the sell-off seen on Wall Street overnight. Japan's benchmark Nikkei 225 Index showed a notable decline, closing down 2.4 percent.

The European markets have also come under pressure, adding to the steep losses posted on Monday. The U.K.'s FTSE 100 Index is down 1.7 percent, while the French CAC 40 and the German DAX Index are falling 1.8 percent and 1.4 percent, respectively.

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