Stocks gave up some gains after a report showed the US trade deficit edged higher, but are poised for a mild rebound at the start Tuesday, with investors dipping back into stock index futures following Monday's sharp declines.
A government report showed the US trade deficit growing to $27.6 billion, somewhat lower than expected and raising concerns about consumer weakness reflected in decreasing demand for foreign goods.
Banks again were in focus as major institutions reacted to stress test results released last week.
Citigroup shares rose 2 percent in premarket trading after saying it was using $45 billion in Troubled Asset Relief Program (TARP) funds to make new loans.
Bank of America gained more than 1 percent following its announcement it will sell $7.3 billion of its stake in China Construction Bank.
Large banks were mostly higher, though a few struggled early.
Bank of New York Mellon slipped 2.2 percent after raising $1.2 billion in new shares at $28.75. The drop in premarket trading, though, mostly reflected the offering price.
Also, US Bancorp shares fell nearly 3 percent after the company filed a prospectus with the Securities and Exchange commission saying it planned to sell up to $1 billion in senior notes but did not detail how it planned to use the money.
Outside the sector, Ford Motor shares fell more than 4 percent afuter the automaker said it will sell 300 million common shares, in part to raise cash to pay off health-care obligations.
And General Motors shares tumbled 9 percent as the company continues its seemingly inexorable trudge towards bankruptcy. Six GM executives revealed after the bell Monday they dumped direct holdings in the company, shedding $315,000 in common stock.
Bond insurer MBIA shares surged more than 10 percent after posting a profit Monday that followed up a massive annual loss in which doubts were raised about the company's survival. MBIA shares hit $7.68 a share premarket but in the past year traded as low as $2.17.
The Nasdaq tech gauge had been weaker earlier but moved above fair market value with an hour left before the open.
Shares of First Third International Bank gained more than 4 percent premarket,
Cell Therapeutics was heavily traded before the market open, falling 9 percent after the company said Monday it was offering an exchange of $89.2 million for oustanding convertible notes.
In Europe, most major indexes were slightly higher. Energy shares were among the biggest winners as crude prices hit a six-month high, topping $59 a barrel. But Asian markets sank, feeling the brunt of Wall Street's selloff.
Stress tests remained a key phrase. The European Union will conduct stress tests on its banking system, to uniform standards, but it will not be testing individual banks, sources told Reuters.
Late Monday, well-known banking analyst Meredith Whitney told CNBC she would not own bank stocks at this time.
But Federal Reserve Chairman Ben Bernanke said after the bell Monday the response to the stress testing of 19 banks was encouraging, as it is already helping some banks gain access to private capital.