Wall Street takes stock of China rate cut

U.S. stock index futures pointed to a flat to slightly higher open on Wall Street Monday as investors reacted to overseas markets and the second rate cut by China's central bank in three months.

The People's Bank of China (PBOC) cut benchmark interest rates by 25 basis points to 5.35 percent on Saturday as deteriorating economic conditions forced the central bank to shorten the time gap between policy moves.

The HSBC/Markit Purchasing Managers' Index (PMI) for China climbed to 50.7 in February—the strongest level since July—from the contraction level of 49.7 in January, as overall new orders picked up. However, the survey indicated that manufacturing contracted significantly as the firms struggled to cope with erratic export demand and deflationary pressures.

In the U.S., investors will be watching for a number of data releases Monday.

Personal income data showed an increase of 0.3 percent in income, while personal spending fell 0.2 percent in January.

ISM Manufacturing for February and construction spending data are due at 10 a.m. ET.

In corporate news, HP announced on Monday it will acquire Aruba Networks for approximately $2.7 billion.

Sotheby's reported adjusted earnings of $1.12 that missed estimates on revenue of $351.2 million that beat expectations.

Companies reporting after the bell include Mylan Labs, Palo Alto Networks and Salix Pharma.

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Berkshire Hathaway is in focus following the release of Warren Buffett's annual investment letter and the company's latest earnings. Those numbers did fall short of estimates, and Buffett said it was likely that although Berkshire would outperform other companies in the future, its size may make it impossible to equal past gains.

Over the weekend, NXP announced it is buying rival Freescale Semiconductor for about $11.8 billion in cash and stock, for a deal valued at $40 billion total. Freescale stockholders will receive $6.25 per share in cash and 0.3521 NXP shares for each share they now hold.

Asian markets were trading higher Monday following the move to stimulate the world's second largest economy.

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In Europe, stocks turned lower with oil prices. Earlier, investors cheered data showing that deflation in the euro zone eased in February while the rate of unemployment fell in January.

Crude oil traded around $49 a barrel and Brent crude traded near $61 a barrel.

Reuters and CNBC.com contributed to this market report.