Higher open seen for stocks

U.S. stocks were set for a higher open Tuesday ahead of the January auto sales reports, aided by better-than-expected Merck earnings.

At 8:17 a.m. ET, Dow Jones industrial average, Standard & Poor's 500 and Nasdaq 100futures were higher.

Futures measure current index values against perceived future performance and offer an indication of how markets will open trading begins in New York.

Peter Cardillo, chief market economist for Avalon Partners, said that investors appeared to be reacting to Merck's relatively strong earnings.

Merck (MRK, Fortune 500) reported net income of more than $1.6 billion for the fourth-quarter, compared to a loss in the year-earlier quarter. The drugmaker announced earnings of 78 cents per share, excluding charges related to restructuring. Analysts had expected Merck to report earnings of 74 cents per share, according to a survey from Thomson Reuters.

This follows mixed trading on Monday, when investors were focused on the Senate debate over the $885 billion stimulus package. The debate continues Tuesday.

"The moving factor today, initially, will be earnings and car sales and then, as we move through the rest of the day, the rhetoric out of Washington," said Cardillo.

Corporate results: Dow Chemical (DOW, Fortune 500) reported a loss of $1.55 billion for the fourth quarter, or a loss of $1.68 per share. The company blamed nearly $1 billion in charges stemming from restructuring costs, the impact of Hurricanes Gustav and Ike, and other factors.

Motorola (MOT, Fortune 500) reported a fourth-quarter net loss of $3.6 billion, or $1.57 per share, and said it was suspending its dividend. The company said it would cut $1.5 billion in costs this year, and appointed an acting chief financial officer.

UPS (UPS, Fortune 500) reported adjusted diluted earnings of 83 cents per share for the fourth quarter, down 22% from the year-ago quarter. Chief Executive Scott Davis blamed "a severe decline in economic activity around the world" resulting in "sharply lower package and freight volume for UPS."

Economy: The National Association of Realtors' pending home sales index for December is due after the opening bell. Auto sales, which are expected to plunge, are due beginning at midday.

World markets: Stocks closed lower in Asia, despite new measures from the governments of Australia and Japan to boost economic growth. European indexes were higher.

Oil and money: Oil prices rose 32 cents a barrel to $40.40 in electronic trading. The dollar rose versus the yen and the British pound, but fell against the euro.