Futures Turn Course as Merck Surprises

US stock index futures indicated a flat open Tuesday, following a mixed close for stocks Monday, as investors feared the government stimulus plan may not provide the catalyst they hoped for.

Futures were off their morning lows and even turning slightly positive following positive earnings from pharmaceutical Merck , which posted a profit of 87 cents per share against a loss of 75 cents per share the previous year. The Dow component gained more than 6 percent in premarket trading and brought futures into mildly positive territory.

Citigroup also gained about 3.5 percent after a report that the troubled bank is expected to start lending $36.5 billion in mortgages and credit cards and in the purchase of troubled assets.

Pessimism came from doubts about the government's plan to jumpstart the economy and a fresh round of tough earnings news.

The near $900 billion stimulus package faced a "difficult next few days," according to President Obama, as the Democratic-controlled Senate debated the plan amid Republican opposition.

Obama is expected to name Senator Judd Gregg as his nominee for Commerce Secretary, according to a White House official.

Shares of BP were under pressure early, with the energy giant falling 3.4 percent after it reported a $3.3 billion loss during the previous quarter. BP said lower energy prices caused the drop, which was well off the $4.4 billion profit the company posted the previous year.

At the same time, traders digested another round of earnings reports, with Motorola posting a $1.57 per share loss and saying it was suspending its quarterly dividend. Shares quickly fell 2.6 percent.

Dow Chemical joined the chorus of dismal news, posting a $1.5 billion loss in the fourth quarter as sales dropped 23 percent to end one of the company's worst years. Shares tumbled 6.7 percent premarket.

While Schering-Plough swung to a profit of 27 cents a share in the fourth quarter, the drugmaker actually missed analyst expectations of 30 cents as it said slowing drug sales held revenue down. The company had lost $2.08 a share in the previous year.

The state of companies' balance sheets was causing concern on Wall Street. Department-store operator Macy's announced plans to cut 7,000 employees and slash its dividend Monday. Shares fell nearly 7 percent premarket.

Shares of SanDisk sank more than 22 percent premarket after the flash memory-card maker warned investors that its quarterly revenue would miss analysts’ expectations. SanDisk also said it may issue a stock offering.

Also, homebuilder DR Horton posted a narrowed loss of 20 cents per share that beat analyst expecations of a 52-cent per share loss.

On the economic front, chain store sales are due out at 7:45 am New York time and December’s pending home sales are out at 10 am.