Wall Street stocks were set for a higher open on Monday after a steep market decline last week as plans emerged to ease Europe's debt crisis, potentially offsetting geopolitical concerns after the death of North Korea's leader.
European officials will discuss a draft text of a new euro zone fiscal compact later Monday that could be finalized by the end of January.
And having agreed to offer 150 billion euros to the International Monetary Fund to raise its crisis-fighting capacity, officials will also consider the size of individual bilateral loans to the fund.
The market is doing pretty well this morning, and the support is coming from the fact that (EU ministers) are seeking to draw more financial support for the crisis though the IMF, said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.
But trading could turn volatile as investors eyed developments in North Korea after its reclusive leader, Kim Jong-il, died of a heart attack while on a train trip.
How things will develop in North Korea, including the succession process, could be of concerns to investors but in the short term, it is a mourning period and in this time, any provocation is highly unlikely, said Hong-sik Moon, analyst at South Korea's Institute for National Security Strategy based in Seoul.
Adding to worries, Fitch was the latest rating agency to warn it may downgrade European sovereign debt. It said Friday that the ratings of France and six other euro zone countries could be cut as a comprehensive solution to the region's debt crisis was technically and politically beyond reach.
Asian stocks dropped after Kim's death was reported, while European shares reversed early losses and were up nearly 1 percent, halting a sharp 1-1/2 week selloff, as investors bought up shares in defensive sectors.
S&P 500 futures rose 5.1 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 rose 54 points, and Nasdaq 100 futures added 14 points.
Major S&P 500 levels to watch this week were 1,200 and 1,260, said Ari Wald, an analyst at BBH Equity Strategy Research Team in New York.
1,200 is support from the index's downward sloping 100-day moving average and the uptrend connecting its October and November lows. A breach of this demand could stir additional technical selling to 1,130-1,150 intermediate-term support, he said.
1,260 is resistance from the index's downward sloping 200-day moving average and the downtrend connecting its October and December peaks. A breakout above this supply would argue for continued seasonal strength through the first quarater of 2012.
A tax break for 160 million U.S. workers was in doubt in the face of strong opposition from U.S. House of Representatives Republicans who have rejected a two-month extension that was overwhelmingly approved by the Senate over the weekend.
Saudi billionaire investor Prince Alwaleed bin Talal on Monday said he bought a $300 million stake in fast-growing microblogging site Twitter, gaining another foothold in the global media industry.
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On the macroeconomic side, investors awaited the National Association of Home Builders' December housing market index, due at 10:00 a.m. EST (1500 GMT). Economists in a Reuters survey expected the index to be unchanged at 20.
A rally in U.S. stocks fizzled on Friday, leaving major indexes with modest gains as investors again were torn between hope the U.S. economy was improving and fears over Europe's debt crisis.
(Reporting by Angela Moon; editing by Jeffrey Benkoe)