Stocks headed for a higher open on Monday, with financial shares set to lead gains after news of the latest large capital injection into a major bank by wealthy investors.
Optimism about the likelihood of a Federal Reserve interest rate cut on Tuesday also buoyed sentiment.
Bank stocks got a boost from news that Swiss bank UBS, which announced $10 billion in subprime writedowns, had obtained an emergency capital injection from the Singapore government and an unnamed Middle East investor.
Separately, the Investment Corporation of Dubai, a $81.70 billion holding company for some of the emirate's biggest businesses, said on Monday it had held talks with JPMorgan Chase & Co on ways to cooperate.
Looking at the financial stocks, a lot of them are undervalued from a pure valuation point, looking at the short term, said Cleveland Rueckert, market analysts at Birinyi Associates Inc. in Stamford, Connecticut.
There are definitely value plays out there, but from our standpoint as a firm, we're still shy on the financials. You still have enough uncertainty in the longer term.
S&P 500 futures were up 4.2 points, above fair value, a mathematical formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract.
Dow Jones industrial average futures DJc1 rose 40 points, and Nasdaq 100 futures added 4.5 points.
The Fed is expected to cut the key fed funds interest rate by at least a quarter percentage point from the current 4.5 percent when they meet on Tuesday.
The sole economic report set for release is October pending home sales at 10 a.m. EST.
On the technology front, U.S. phone company AT&T Inc said it was buying core routers from Cisco Systems Inc to upgrade its Internet backbone network.
The announcement comes amid concern about slower spending by U.S. companies after Cisco, the world's biggest maker of routers, reported a fall in spending by U.S. banks and automakers last quarter.
Shares of Dow component Citigroup Inc (C.N: Quote, Profile, Research) rose nearly 1 percent to $34.58 before the bell. The board of the largest U.S. bank will hold a meeting on Monday and Tuesday to consider candidates for chief executive, a source familiar with the situation said on Sunday.
UBS shares initially fell nearly 3 percent on the report of the write-down, but later they recovered and were up 1.1 percent in European trading.
Shares of JPMorgan rose 1.5 percent to $46.78 before the bell. On Sunday a report in Barron's newspaper cited analysts as saying shares of the No. 3 U.S. bank were undervalued.
Last month Citigroup said it was selling a 4.9 percent stake for $7.5 billion to the Abu Dhabi sovereign fund, giving the largest U.S. bank fresh capital as it wrestles with fallout from the subprime mortgage crisis.
(Additional reporting by Jennifer Coogan; Editing by Kenneth Barry)