Wall Street was set for a modestly higher open on Monday as investors were hopeful banks will be able to raise any capital they may need as a result of findings in the government stress tests, but jitters over the health of the sector persisted.

Shares of Sprint Nextel were up 7.1 percent at $5.00 in premarket trading after the company reported results that beat expectations. Investors have been encouraged by better-than-expected results this earnings season, adding on to hopes the recession is showing signs of abating.

Citigroup Inc is looking to raise any additional capital it might need from private investors rather that giving more control to the government, according to a Bloomberg report citing people briefed on the matter.

The Financial Times, citing people close to the situation, reported that Bank of America Corp is working on plans to raise more than $10 billion in fresh capital, even as it and Citigroup launch last-ditch attempts to convince the U.S. government they do not need to bolster their balance sheets.

The market already knows that Citi and Bank of America are on the list that's going to need more capital, said Peter Cardillo, chief market economist at Avalon Partners in New York.

The market seems to be thinking banks might just be able to raise capital on their own and if that's the case, then (that means) less government interference and that's basically what the market would like to see.

Shares of Citigroup were flat after initially pointing higher ahead of the opening bell, while Bank of America was off 1.5 percent to $8.57. Bank stocks are likely to remain volatile as uncertainty over the health of the sector nags.

S&P 500 futures rose 3.10 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 climbed 30 points, and Nasdaq 100 futures added 11.75 points.

The government has assessed 19 major U.S. banks to ensure the institutions have sufficient capital to withstand the recession. The results, which are expected to be announced on Thursday, are expected to show banks must raise possibly $150 billion or more in fresh capital and the stocks of the neediest banks are likely to take a hit.

Fears over the swine flu outbreak eased over the weekend as the Mexican health ministry announced its flu epidemic had passed the worst and experts said the virus might be no more severe than normal flu, although it could still have an impact on world health.

On the data front, investors were awaiting pending home sales for March for insight on the health of the housing market.

In the auto sector, Italy's Fiat SpA said it could seek a merger of its auto group with General Motors Corp's Europe unit, then spin off the combined company and list it. Shares of GM rose 4.4 percent to $1.89.

Stocks rose on Friday as surging oil prices pushed energy shares higher and fresh economic data suggested key parts of the economy could be stabilizing. Since rallying from March's bear market low, the S&P 500 is up nearly 30 percent.

(Editing by Theodore d'Afflisio)

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