At 8:20 a.m. ET, Nasdaq and S&P futures were trading higher, pointing to a positive open for Wall Street.

Stocks fell sharply Monday, with the Dow Jones industrial average losing more than 2%. Credit concerns hammered market sentiment, and were likely to remain in focus after Merrill Lynch said it would raise new capital and sell a big chunk of its risky assets.

Finance: Merrill Lynch (MER, Fortune 500) said after the market close Monday that it would take a $5.7 billion writedown and sell off $11.1 billion in mortgage securities in the current quarter.

The brokerage also said it plans to raise $8.5 billion through the issuance of new stock.

"That's looked at as a healthy purge," said Art Hogan, chief market analyst at Jefferies & Co.

Shares of Merrill rose 2.6% in premarket trading.

Oil: Oil prices lost some of Monday's gains. Light, sweet crude for September delivery fell before the bell, declining 52 cents to $124.21 a barrel in electronic trading.

Energy: In energy-related earnings, BP (BP) reported a surge in quarterly profit and sales, which were boosted by the soaring cost of oil.

Valero Energy (VLO, Fortune 500) reported a second-quarter earnings drop of more than 65%. The company blamed shrinking margins for refined products such as gasoline and higher costs due to the price of electricity and natural gas needed to operate refineries.

Tech & telecom: Sony (SNE) said its quarterly profit fell by nearly 50%. The consumer electronics maker was hit by a strong yen and price competition in its electronics sector.

Alcatel-Lucent (ALU) said its chairman and chief executive will both step down after the telecoms giant report its sixth straight quarterly loss.

Consumer products: Colgate-Palmolive (CL, Fortune 500) reported an 18% increase in quarterly profit and boosted its outlook for 2009. The consumer products maker said cost reductions and price hikes, along with stronger sales in Asia and Latin America paid off.

Food: Fresh Del Monte Produce (FDP) reported a 34% decline in second-quarter income due to higher costs and flooding at a banana operation in Brazil.

Economy: A report on consumer confidence was due after the market open. The Case-Shiller home prices index was also on tap.

Other markets: Asian markets tumbled after Wall Street's miserable session on Monday. European shares fell in morning trading. 

NEW YORK (CNNMoney.com) -- Stocks looked set for a higher start Monday, though investors remained cautious about the banking sector and oil prices moved higher.

In the last hour of trading before the bell, Nasdaq and S&P futures were higher, pulling out of negative territory, with a comparison to fair value suggesting a higher but cautious start for Wall Street.

Banks: Financial shares could come under pressure after federal regulators shut two more regional banks late Friday. The two banks, owned by First National Bank Holding Co., are due to reopen Monday as Mutual of Omaha Bank branches.

Housing: Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500) were up in pre-market trading, after the Senate passed a housing rescue bill Saturday. The $300 billion housing rescue bill is aimed at helping troubled homeowners and supporting the two mortgage finance giants. But the mortgage giants were off their pre-trading highs from earlier Monday morning.

Energy: Oil prices headed higher in electronic trading. Light, sweet crude for September delivery rose 94 cents to $124.20 a barrel. The front-month contract fell Friday to its lowest point in weeks amid concerns about flagging demand.

Earnings: Dow component Verizon Communications (VZ, Fortune 500) is due to report earnings before the market open. Amgen (AMGN, Fortune 500), the world's biggest biotech in terms of sales, will report earnings after the market close.

Other companies set to report quarterly results this week include Starbucks (SBUX, Fortune 500), Exxon Mobil (XOM, Fortune 500) and Chevron (CVX, Fortune 500).

Economy: Several key reports are due out this week, including the latest readings on home prices, economic growth and the labor sector. No major readings are on tap for Monday.

Motorola: Stocks to watch Monday include Motorola (MOT, Fortune 500). The company plans to reorganize its second largest unit - home and networks mobility - into three separate businesses, the Wall Street Journal reported Sunday.

Toyota: Japanese automaker Toyota (TM) cut its global sales and output targets for 2008 amid the slumping North American market.

Unilever: Unilever N.V. (UN), one of the parent companies of consumer products maker Unilever Group, said it would be selling off its North American laundry detergent business, which includes the All, Snuggle and Wisk brands.

Other markets: Japan shares ended Monday's session slightly higher, but well off their highs for the day. European markets were lower in morning trading after a report showed consumer sentiment in Germany, Europe's largest economy, fell below its five-year low. 

The Dow Jones industrial average (INDU) ended the session up 21 points, finishing about 0.2% higher. Stocks tumbled Thursday, with the Dow losing 283 points, and all of the major gauges fell about 2%.

The broader Standard & Poor's 500 index (SPX) advanced 0.4% Friday. But the tech-heavy Nasdaq composite index (COMP) fared much better, climbing 1.3%, led by strong earnings from Juniper Networks.

Stocks rose after the opening bell as investors cheered a surprise rise in factory orders. The advance continued as oil prices began to decline sharply and a housing market report dealt a much softer-than-expected blow.

But blue chips fell from their highs - briefly into negative territory - after Standard & Poor's said the mortgage meltdown has led to investor fears about the credit positions of government-backed mortgage finance giants Freddie Mac and Fannie Mae.

Though S&P affirmed Fannie and Freddie's AAA credit ratings, the ratings firm put the mortgage financers on a negative credit watch list and said it may lower its ratings after a further review. (Full story).

"The market turned on the S&P's remarks on Freddie and Fannie," said Peter Cardillo, chief market economist with Avalon Partners. "That overshadowed some of the good economic data we had earlier."

Investors will see if the market can sustain a rally on Monday, a day devoid of any scheduled economic reports. Kraft Foods (KFT, Fortune 500) and Verizon Communications (VZ, Fortune 500) will report on quarterly earnings before the bell.

Economic news: Orders for durable manufactured goods rose unexpectedly in June, according to a U.S. Commerce Department report released Friday. Orders to factories for big-ticket items like cars, appliances and machinery rose 0.8% last month, far surpassing economists' forecast of a 0.4% decline. (Full story).

Also sending stocks up was an encouraging report on new home sales. Sales of new homes fell 0.6% in June to an annual sales rate of 530,000, from an upwardly revised rate of 533,000 in May, according to the U.S. Census Bureau. Despite home sales slipping, that level was well above economists' expectations. (Full story).

Investors cheered the news from the battered U.S. housing market, especially as Thursday had brought a weak report on sales of homes by homeowners. Existing home sales slipped 2.6% in June, according to the National Association of Realtors.

"All the economic news came in better than expected Friday," said Cardillo. "Investors engaged in a relief rally after Thursday's major decline."

Wall Street also embraced news that consumer confidence got a larger boost in July than previously reported, according to a consumer sentiment survey conducted by Reuters and the University of Michigan. The revised index number came in at 61.2 in July, up from a preliminary reading of 56.6 for July and from 56.4 in June.

"Consumer sentiment is obviously behind the rally," said Cardillo. "That's a very encouraging sign."

Financials sink: A day after weak economic indicators put a damper on a strong recent run by financial stocks, banks continued their slump Friday, preventing market gauges from making up more lost ground.

"Obviously there are still some ongoing concerns about the financial sector," said Cardillo. "At the moment, they're under pressure, pulling back after a strong runup."

Government-backed mortgage financiers Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500) both slipped for the second straight session after the House passed a rescue bill Wednesday that will throw government support behind the struggling home-loan finance giants.

Shares fell further before recovering some after the S&P released its statement on the firms, saying investors could lose everything if the government bails out the firms. Fannie fell 3.9% and Freddie slipped 6.1% on Friday.

Other banks also continued Thursday's losses. Wachovia (WB, Fortune 500) slipped 7.6%, still reeling from a Thursday downgrade by a Morgan Keegan analyst. Citigroup (C, Fortune 500) lost 1.1% and Bank of America (BAC, Fortune 500) fell 3.5%.

But Washington Mutual (WM, Fortune 500), whose stock dove more than 13% Friday morning, recovered most of the losses after the battered savings and loan confirmed that it had beefed up its liquidity to more than $50 billion. The company previously had said that its liquidity was $40 billion as of the end of the second quarter. Shares finished the day down 4.7%. (Full story).

Oil: Oil prices fell $2.23 to settle at $123.26 per barrel on renewed concerns about demand destruction. Crude has plummeted $24 from its high of $147.27 set on July 11. (Full story).

"Any further break in oil would certainly lift Wall Street's spirits," said Cardillo. "For instance, if we could fall below $120, that would encourage investors."

Corporate news: Techs got a big boost Friday as network equipment maker Juniper Networks (JNPR) reported a 40% gain in quarterly earnings and boosted its full-year outlook. Shares jumped 17.7% Friday.

A day after Ford Motor (F, Fortune 500) reported its worst quarterly loss in company history, Honda Motor (HMC) reported a record profit for its fiscal first quarter. The Japanese carmaker said U.S. sales slumped, but sales grew rapidly in new markets. Shares still fell 2.3%. (Full story).

Video-rental company Netflix (NFLX) said profit rose 4%, boosted by an increase in subscriptions and the introduction of a set-top box that can deliver streaming video directly to a customer's television. Shares were up 4.2% Friday.

Market breadth was positive. On the New York Stock Exchange, advancers topped by a 3-to-2 ratio on a volume of 1.3 billion shares. On the Nasdaq, winners edged out losers on a 3-to-2 ratio on a volume of 2 billion shares.

Gas prices: The average price of gasoline fell 2 cents to $4.006 per gallon in the United States, declining for the eighth straight day, according to a daily survey from motorist advocacy group AAA. It was gasoline's lowest level since June 7, when the average crossed $4 for the first time. (Full story).

Other markets: In currency trading, the U.S. dollar was mixed against global currencies. The greenback rose against the Japanese yen, but fell a bit against the euro and British pound. (Full story).

COMEX gold for August delivery rose $4.50 to settle at $926.80 an ounce.

Treasury prices fell Friday, bringing the yield on the benchmark 10-year note up to 4.11% from 4.01% late Thursday. Bond prices and yields move in opposite directions. (Full story). 

The Dow Jones industrial average (INDU) lost 283 points, tumbling 2.4%. The Dow finished 30 points higher Wednesday as investors cheered falling oil prices despite a cautious report on the economy from the Federal Reserve.

The broader Standard & Poor's 500 index (SPX) index fell 2.3% from Wednesday's close. The Nasdaq composite index (COMP) sank 2% in Thursday trading.

The double whammy of slumping existing home sales and a jump in jobless claims renewed investor jitters that tough economic times are far from over.

That sent financial sector stocks plummeting, dragging the rest of the market down with them. With recent steep bank losses, dour economic indicators led investors to fear that the nation's lingering credit crisis would continue for the long-haul.

"Investors don't see any turn in the housing market," said Robert Philips, president and chief investment officer of Walnut Asset Management.

The subprime mortgage meltdown led to a crisis in lending and credit, the main sources of revenue for banks.

"That compounds all the issues that confront financials," Philips added.

Stocks opened mixed in the first few minutes of trading, as techs got a boost from a strong quarterly earnings report from Amazon.com, while an $8.7 billion loss from Ford Motor pressured blue chips. But stocks quickly turned much lower as the weak economic news was absorbed.

Investors will see if the economy can produce some better news Friday, as reports on durable goods orders, consumer sentiment and new home sales are due. Economists, however, expect all three indicators to weaken further Friday.

Economic woes: A report from the U.S. Labor Department showed new unemployment claims rose much more than expected last week. New applications filed for jobless benefits rose by a seasonally adjusted 34,000 to 406,000 - a level not seen since hurricanes devastated the Gulf Coast in September 2005. (Full story)

"Investors are concerned over the weaker economic data that's coming through Thursday," said Bill Stone, chief investment strategist with PNC Wealth Management. "With more jobless claims, people can't pay their bills, which means more write-offs for companies."

Also driving down stocks was a report from the National Association of Realtors that showed homeowner sales fell 2.6% to a lower-than-expected 4.86 million annual rate in June. The economy has remained in a slump as home sales continue to decline, leading to a slowdown in consumer spending as American homeowners' purchasing power dries up. (Full story)

Furthermore, the percentage of vacant homes available for sale in the second quarter of 2008 fell just slightly from the record high set in the first quarter, according to Census Bureau figures released Thursday. (Full story)

That helped drag down shares of homebuilders, as the large inventory of homes must be sold off before contractors can profit from building new ones.

Shares of Lennar (LEN, Fortune 500) fell 18.2%, Centex (CTX, Fortune 500) dropped 16.4%, KB Homes (KBH, Fortune 500) sank 15.4%, D.R. Horton (DHI, Fortune 500) lost 13.8% and Hovnanian (HOV, Fortune 500) fell 8.7% all Thursday.

Financial sector: Economic weakness put a damper on a strong recent run by financial shares, as investors worried that the longer the weak economy drags on, the longer the credit crisis will be exacerbated.

Shares of Washington Mutual (WM, Fortune 500) led the downward charge with a 13.3% loss Thursday. Last week, the bank reported a much bigger loss than Wall Street expected as it set aside more money for bad loans.

Other banks that have posted large losses recently also fared poorly Thursday. Citigroup (C, Fortune 500) fell 9.8%, JPMorgan (JPM, Fortune 500) lost 6.7% and Wachovia (WB, Fortune 500) tumbled 11.1%.

"When economic data gets worse, investors have to feel worse about a bank that's in trouble with its credit issues," said Stone. "It makes sense that distressed financials would have a rougher day on a day like this."

Shares of UBS (UBS) fell 7.1% after New York State Attorney General Andrew Cuomo announced he is bringing a multi-billion dollar civil lawsuit against the Swiss bank for allegedly pushing everyday investors into buying troubled auction-rate securities. (Full story)

Even news of the housing rescue bill crossing a hurdle did little to inspire investors. The House on Wednesday voted 272-152 to pass sweeping legislation that will throw government support behind struggling mortgage finance giants Fannie Mae and Freddie Mac. (Full story)

Still, shares of Fannie Mae (FNM, Fortune 500) sank 19.9% and Freddie Mac (FRE, Fortune 500) dropped 18.4% Thursday.

"Investors bought up Fannie and Freddie on the expectation that the government would pass a rescue bill," said Philips. "Now they're selling on the news."

Ford: The struggling U.S. automaker Ford reported an $8.7 billion net loss for the second quarter, marking its biggest quarterly loss ever. The third largest automaker by sales also said it would restructure its North American product line as rising gas prices have severely hampered consumer interest in big trucks and SUVs. It will include more fuel-efficient vehicles and bring 6 European models to North America by 2012. Shares of Ford (F, Fortune 500) fell 15.3% in Thursday trading. (Full story)

"The auto sector's numbers may be shocking, but think about all the headwinds they've been facing with high gas prices and low consumer confidence," said Stone. "The sector has already helped drag the economy into a recession."

Other corporate news: Internet retailer Amazon.com (AMZN, Fortune 500), posted better-than-expected second-quarter earnings after the market's close Wednesday. Amazon also boosted its 2008 revenue projections, as CEO Jeff Bezos said high gasoline prices may be luring shoppers to its Web site. Shares soared 11.6% Thursday. (Full story)

There were well hundreds of corporate financial results announced before and after the bell Thursday, and they were generally a mixed bag.

Big names before the Thursday's open included conglomerate 3M (MMM, Fortune 500), which posted a sizeable profit and beat analysts' expectations. But, Dow Chemical (DOW, Fortune 500) and Rohm and Haas (ROH, Fortune 500) reported net income that disappointed Wall Street. Drugmaker Eli Lilly (LLY, Fortune 500) posted strong results, but missed earnings estimates by a penny.

Dow component McDonald's (MCD, Fortune 500) was downgraded by Deutsche Bank and AT&T (T, Fortune 500) was lowered by JPMorgan. Shares of McDonald's fell 2.2% and AT&T lost 4.1%

The two largest satellite radio companies, XM (XMSR) and Sirius (SIRI) agreed to pay the Federal Communications Commission a $19 million fine for violating radio transmission rules Thursday. The move was widely expected to clear the path for a merger between the two companies. Shares of XM lost 3.4% and Sirius dropped 9.7%.

Market breadth was overwhelmingly negative. On the New York Stock Exchange, decliners topped advancers by a margin of 4 to 1 on a volume of 1.6 billion shares. On the Nasdaq, losers edged out winners on a 2 to 1 ratio on a volume of 2.6 billion shares.

Energy: Oil prices rose $1.05 to settle at $125.49 Thursday after falling nearly $4 Wednesday on continued concerns about reduced demand. Oil has plummeted about $22 from its high of $147.27 set on July 11. (Full story)

The average price of a gallon gasoline fell 1.6 cents to $4.026 a gallon in the United States, declining for the 7th straight day, according to a daily survey from motorist advocacy group AAA. (Full story)

Other markets: In currency trading, the dollar continued to rise against European currencies. The U.S. currency rose against the euro and British pound, but fell slightly against the Japanese yen.

COMEX gold for August delivery fell 50 cents to settle at $922.30 an ounce.

Treasury prices rose Thursday, bringing the yield on the benchmark 10-year note down to 4.01%. Bond prices and yields move in opposite directions.