U.S. stock index futures indicated a slightly weaker open Tuesday, following a strong rally in the previous session on the back of fresh economic stimulus proposals.
Many investors hoped Monday's rally would be the start of a sharp Santa rally, but high levels of volatility kept market participants fearful for further declines. Futures were above level ground but below fair value levels, which can indicate a drop at the market open.
"If we just get some sideways action for a little bit of time here then as we go into 2009 that will be a good time to jump back into stocks," Rob Morgan, president of Dearden, Maguire, Weaver, and Barrett, told "Worldwide Exchange."
On the economic front, President-elect Barack Obama is advocating increased infrastructure spending to aid job creation and stimulate the country's economy, which helped boost the early-week rally.
However, both FedEx and Texas Instruments cut their profit forecasts after the bell Monday, which weighed on the futures, along with persistent doubt over the future of the Big Three automakers.
FedEx shares fell nearly 10 percent in premarket trading while Texas Instruments fell nearly 3 percent.
Negotiators tried to finalize short-term loans for the struggling carmakers, to stave off liquidity issues and avert bankruptcy. The loans, which could run to $15 billion of government money, would be given on the guarantee of an industry overhaul.
Investors, though, took profits in the companies before the bell, sending General Motors stock down nearly 2 percent and Ford lower by 5 percent premarket after both stocks rallied Monday.
The House Oversight Committee holds a hearing at 10 am New York time into the collapse of Fannie Mae and Freddie Mac with several current and former executives expected to testify.
In other economic news, the NFIB November survey of small businesses is released at 7:30 am New York time and October's NAR pending home sales results are out at 10 am.