However, the badly beaten financial sector could be in for more pain, after reports over the past week that Citigroup Inc. may have to take a larger-than-feared write-down; the bank's earnings report is due Tuesday.
Elsewhere in the sector, Merrill Lynch & Co. Inc. is seeking $4 billion, in a second capital raising to stanch the blood-letting on its balance sheet, according to the Financial Times. The Kuwait Investment Authority could invest as much as $3 billion in the deal, which could be announced by the middle of the week.
Sears Holdings Corp. warned that its upcoming fourth-quarter report could show a decline as high as 51 percent from year-earlier levels, adding to concerns that economic weakness is slowing the retail sector. The company Monday forecast a result of $2.59 to $3.48 a share, which would be down from $5.33 a year before and a Thomson Financial forecast of $4.43 a share.
Stocks sold off sharply last week after a chorus of Wall Street economists predicted the U.S. is about to slide into a recession. The Dow Jones industrial average lost 1.51 percent during the week, the Standard & Poor's 500 index dropped 0.75 percent, and the Nasdaq composite index gave up 2.58 percent. However, a recession cannot be declared until there are two quarters in a row of economic shrinkage as measured by gross domestic product data and that has not occurred yet.
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 Last week's losses have left stocks cheap enough to tempt some investors back into the market. At the same time, the talk of economic weakness and recent pointed remarks by Federal Reserve Chairman Ben Bernanke have convinced investors the central bank will cut rates later this month. The expectation of cheaper money also bolstered sentiment Monday. The Fed's monetary policy committee will meet Jan. 29 and 30.
Dow futures rose 22 points, or 0.17 percent, to 12,683, the S&P 500 futures were up 3.60, or 0.25 percent, at 1,411.40 and the Nasdaq 100 contract up 3.50, or 0.18 percent, at 1929.00.
With no major data reports on the calendar, investors are expected to keep their eyes on corporate and commodities news. Overnight in overseas trade gold futures hit a record, venturing above $913, and investors will want to see if those price levels are sustained in the U.S. session. Dealers attributed the surge to more dollar weakness.
Treasurys were trending slightly higher in early dealings. The yield on the benchmark 10-year Treasury note was 3.77 percent, down from 3.81 percent on Friday. Prices and yields trade in opposite directions.
In overseas trade, crude oil futures overcame early weakness to trade up 83 cents at $93.50 a barrel.
The Tokyo stock market was closed for a holiday Monday. In Europe London's FTSE 100 rose 0.25 percent, Germany's DAX advanced 0.31 percent and Paris' CAC 40 gained 0.30 percent.
[Associated Press; By LESLIE WINES]
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