Builders' Deal Pulls Up Futures; Tech Gains

US stocks headed for a flat to slightly positive Wednesday as deal news and a rebound in bank shares helped ease fears about earnings and the economy.

Technology was the strongest area heading into the open, with Nasdaq futures above fair market value. Shares of bankrupt flash memory chip maker Spansion soared 152 percent on news that the company will receive $70 million from Samsung to settle patent lawsuits.

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  • The major indexes ended the previous session lower after aluminum-maker Alcoa just missed its earnings expectations. Focus then shifted to the next batch of corporate results due out over the coming trading days. Alcoa shares gained 1.4 percent in premarket trading.

    Futures for the Dow and Standard & Poor's 500 were about flat and well off their lows for the morning. Banks shares were broadly higher, with Citigroup gaining 2.5 percent.

    The morning kicked off with a big merger in the housing industry, with Pulte Homes saying it would buy Texas-based builder Centex for $1.3 billion in stock. The deal would create the nation's largest home builder.

    Centex shares surged premarket more than 23 percent, though less than the 32.6 percent premium that the $10.50 per share offer represents over the company's Tuesday closing price.

    More positive news came for the industry with a 4.7 percent increase in mortgage applications. Previous gains in home loan applications have mostly come from refinancing to capitalize on dropping rates, but the bulk of last week's gains stemmed from new purchases, despite a slight uptick in mortgage rates.

    In earnings news, Family Dollar shares gained more than 4 percent premarket after the discount retailer met analyst expectations with earnings of 60 cents per share.

    Asian and European stock indexes were broadly lower as concerns over corporate earnings spread around the globe.

    “We are going to start seeing in the next few weeks the true horror of the credit crunch … (it’s) coming home to roost in the form of horrible and horrendous numbers,” Jack Bouroudjian, chairman of Capital Market Technologies, told CNBC.

    Nouriel Roubini, a professor at New York University's Stern School of Business who is known for his bearish views, said he expected the dire economic conditions to continue. Roubini also thinks that the bear market in stocks is not over yet.

    Adding to the grim predictions, Dallas Fed President Richard Fisher said the US economy remains in trouble and the Fed is "duty bound to apply every tool" it has to fix the problems.

    In corporate news, Brian Moynihan could be next in line to headBank of America after the current chief executive Kenneth Lewis leaves, according to the Wall Street Journal. Lewis indicated he would leave after the crisis had subsided or within three years.

    Meanwhile, numerous applications from banks and insurance companies for the Troubled Asset Relief Program are set to be approved by the Treasury, sources closed to the situation told CNBC.

    And the Term Asset-Backed Securities Loan Facility was tapped for only $1.7 billion in loans during its second round, suggesting that managers remained cautious of using the TALF.

    Constellation Brands also is due to report numbers ahead of the bell.