Futures Soar; Tough Year Remains for EU

Futures soared, pointing to a sharply higher open on the first trading day of the New Year as investors were encouraged by a manufacturing report from China.

Last week, the Dow finished higher for 2011, while the S&P erased its gains to close out largely flat and the Nasdaq ended in negative territory.

Worries over the European debt crisis, which dictated the wild market swings for most of the year are expected to continue.

French President Nicolas Sarkozy, German Chancellor Angela Merkel and British Prime Minister David Cameron all warned of a difficult year ahead in their New Year messages to their respective nations. Despite the arrival of 2012 heralding the tenth anniversary of the single currency 's coming into circulation, there were no celebrations to mark the birth of the euro coins and notes.

Meanwhile, euro zone manufacturing activity declined for a fifth consecutive month in December, although at a slightly slower rate than November's 28-month record low, a survey showed on Monday, suggesting the decline would continue in the early months of 2012.

Dow component Boeing won a $3.5 billion missile contract from the U.S. Defense Department, beating out rival Lockheed Martin .

Chesapeake Energy sold a stake in a shale gas project to French oil giant Total for $2.3 billion. And BP will sue contractor Halliburton to recover cleanup costs related to the massive 2010 Gulf of Mexico oil spill.

Elsewhere Teva Pharmaceutical said its CEO Shlomo Yanai will retire in May and will be succeeded by Bristol-Myers Squibb executive Jeremy Levin.

Starbucks gained after the coffeehouse chain said it is raising prices by an average of about 1 percnet in the U.S. Northeaset and Sunbelt regions.

On the economic front, the Institute for Supply Management’s monthly manufacturing index is scheduled to be released at 10am ET, which is expected to increase to 53.5 for December from 52.7 in November.

Also at 10am ET, the government’s November construction spending figures are forecast to show a 0.3 percent increase, following October’s rise of 0.8 percent. Meanwhile, at 2pm ET, the Federal Reserve will issue the minutes of its most recent interest rate policy meeting.

—Follow JeeYeon Park on Twitter: twitter.com/JeeYeonParkCNBC

On Tap This Week:

TUESDAY: ISM mfg index, construction spending, FOMC minutes
WEDNESDAY: Weekly mortgage applications, Challenger job-cut report, factory orders, auto sales; Earnings from Mosaic
THURSDAY: ADP employment report, jobless claims, ISM non-mfg index, oil inventories, chain-store sales; Earnings from Monsanto
FRIDAY: Non-farm payrolls

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