Stocks were expected to open higher Monday as troubled bank Washington Mutual (WM) looked close to getting an extra $5 billion in capital.
Also on Monday, tech stocks were in focus, as Microsoft (MSFT) and Yahoo (YHOO) wrangled over Microsoft's offer to buy its rival. Yahoo said Monday it is not opposed to the deal but wants a better offer from Microsoft, which had proposed buying Yahoo for $41 billion.
On Friday, the Dow Jones Industrial Average closed 16.61 points, or 0.13%, lower at 12,609.42. The S&P 500 index inched up 1.09 points, or 0.08%, to trade at 1,370.40. The Nasdaq composite index rose 7.68 points, or 0.32%, to 2,370.98.
A weak jobs report weighed on stocks Friday. On the New York Stock Exchange, 17 stocks traded higher for every 14 that fell, while on the Nasdaq, the ratio was 15-14 positive amid active trading.
The first quarter earnings season will begin Monday evening when Alcoa (AA) is the first to report results from the first three months of the year. Analysts are increasingly pessimistic about the quarter. According to Reuters Estimates, analysts now predict S&P 500 companies earnings to fall 11.8% from a year ago, worse than the 8.1% drop they predicted a week ago. Earnings at financial firms are projected to plunge 61%.
In NYMEX trading on Monday, May WTI crude oil futures rose $1.24 to $107.47 per barrel.
Washington Mutual is reportedly considering a deal with private equity firm TPG and other investors, who would invest $5 billion in the bank. The deal would give WaMu -- stung by the mortgage crisis -- extra capital, but it would also dilute existing shareholders' stakes in the firm, the Wall Street Journal reports.
Among other stocks in the news Monday, Apple (AAPL) was upgraded by Thomas Weisel analysts from marketweight to overweight.
UBS (UBS) was reportedly upgraded from neutral to buy by Merrill Lynch analysts.
Discover Financial Services (DFS) made a deal to acquire the Diners Club International business from Citigroup C for $165 million.
Alliant Techsystems (ATK) says it won a $415.6 billion military contract.
The European indexes were higher Monday. In London, the FTSE 100 index was up 0.84% to 5,997. Paris' CAC 40 index rose 0.99% to 4,949.35, and Germany's DAX index added 0.87% to 6,822.55.
Most stock indexes fell in Asia, with Hong Kong's Hang Seng index off 2.44% to 26,887.28 and mainland China's Shanghai Composite up 0.89% to 5,319.86. Japan's stock market was closed.
Treasury market
Treasury prices were falling Monday. The two-year Treasury notes was down 04/32 to 99-24/32 for a yield of 1.888%; the 10-year note was off 16/32 to 99-25/32 for a yield of 3.530%; and the 30-year bond fell 21/32 to 100-16/32 for a yield of 4.349%.