S&P 500 futures gained 1.60 points to 1,437.00 while futures for the technology-rich Nasdaq 100 hiked up 10.50 points to 1,897.50.

Futures for the Dow Jones Industrials Average advanced 13 points to 12,605.

Markets will also be scrutinizing President Bush's State of the Union speech, in which he floated new proposals to expand health insurance coverage and reduce reliance on imported oil.

Within the Dow industrials, fast food behemoth McDonald's Corp. reported fourth-quarter earnings, revenue and same-store sales that rose over year-earlier levels. The stock lost 0.8% to $44.49 in pre-open trading.

The tech sector was boosted after Yahoo rolled out new search ad technology, dubbed Panama, and said it expects to improve revenue per page view over the course of the year.

The stock rallied 5.4% to $28.37 in pre-open trading, even after the Internet search group reported a 61% profit decline, and after Goldman Sachs downgraded the shares due to concerns over valuation.

Sun Microsystems shares climbed 9.2% to $6.17 ahead of the open after Kohlberg Kravis Roberts said it will invest $700 million into the group, and after the company said it swung to a better-than-expected quarterly profit.

Not all was rosy in tech, however, as Advanced Micro Devices shares slumped 6.3% to $16.41 in the pre-open after the chipmaker said it swung to a loss in the fourth-quarter and provided a disappointing outlook.

In addition, software giant SAP AG dropped 4.5% after providing a disappointing margin outlook.

In other markets, crude oil will likely be a focus ahead of weekly energy inventory statistics, and as traders react to President Bush's call to reduce reliance on oil. The March futures contract was last down 32 cents at $54.72 a barrel in electronic trading, after spiking above $55 on Tuesday on the U.S. government's plan to expand the Strategic Petroleum Reserve.

The Treasury market was little changed, as traders had no economic data releases to provide direction. The benchmark 10-year Treasury note was up 5/32 at 98 22/32 with the yield slipping 0.010 percentage points to 4.794%.

The U.S. dollar was mixed vs. its major counterparts. The buck was a bit stronger vs. the British pound after a relatively dovish speech from the governor of the Bank of England and a surprisingly tight 5-4 vote at its last interest-rate decision meeting, though the greenback did weaken somewhat against the Japanese yen.

February gold futures eased $2.90 to $643.00 an ounce in electronic trading.

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Morgan Stanley cut its recommended equity weighting to neutral from positive, further weighing on investor sentiment, while a strong showing from chipmaker Texas Instruments provided a cushion to the selling.

S&P 500 futures were down 1.40 points at 1,429.50 and Nasdaq 100 futures slid 3.75 points to 1,788.50.

Futures for the Dow Jones Industrials Average dropped 9 points to 12,525.

Within the Dow industrials, shares of DuPont tacked on 1.8% in pre-open trading after the chemicals giant reported fourth-quarter earnings that rose above year-earlier levels and met Wall Street forecasts.

United Technologies and Johnson & Johnson reported earnings that also improved over last year, with both results exceeding expectations.

United Technology shares gained 1.4% and J&J shares edged up 0.3% ahead of the open.

The technology sector has been under particular pressure over the last week, with the tech-rich Nasdaq Composite losing 2.9% over the past five sessions after rising 3.6% over the first eight sessions of 2007.

Ken Tower, chief market strategist at CyberTrader Inc., said that while the overall bull market is still intact, upside momentum "has taken a beating."

"Cautious traders now have another reason to approach the market with caution," Tower said.

Alcatel-Lucent gave further reason for concern, as the stock tumbled 11% in pre-open trading after the company warned that it failed to make a profit during the fourth-quarter and that sales declined. S

Also hurting sentiment, Morgan Stanley lowered its equity weighting to neutral from positive, and recommended moving the money to further overweight position cash. The bond weighting remains underweight.

"Many of the factors that turned us more bullish on equities this summer are no longer in place," said Henry McVey, chief U.S. investment strategist at Morgan Stanley.

Texas Instruments provided a glimmer of hope, as its shares advanced more than 3% in pre-open trading after the company reported late Monday earnings that exceeded forecasts and said it was cutting 500 jobs.

Outside of equities, crude oil prices continued to climb, boosted by continued cold weather across much of the U.S. The March crude contract hiked up 81 cents to $53.39 a barrel in electronic trading.

Gold futures also gained, with the February contract up $9 to $643.10, as a slide in the U.S. dollar provided a boost.

The buck slumped to a 14-year low vs. the British pound, which rose to a high of $1.9915. The greenback also suffered against its other major counterparts.