NEW YORK (CNN/Money) - Technology stocks could face some turbulence early Monday after Merrill Lynch downgraded the entire global chip sector to "underweight" from "overweight," saying it expects stock prices to decline further in the second-half of the year.

Early Monday, S&P futures were slightly higher, while Nasdaq futures edged modestly lower.

"Stock prices have declined, but we believe that they have the potential to decline further, and at a minimum we think that semiconductor equities offer no upside from current levels," the investment bank said in a note to clients.

Merrill cut its forecast for the sector's 2005 revenue growth to 6 percent from 16 percent, citing weaker average selling price assumptions and a lower unit forecast.

In the commodities market, U.S. crude futures edged above the $40 a barrel mark, up 7 cents to $40.03 in electronic trading. Brent oil futures were 9 cents higher at $37.14 a barrel in London.

General Electric (GE: Research, Estimates)'s better-than-expected earnings helped lift stocks Friday, although not enough to make them positive for the week. The Dow Jones industrial average gained 0.4 percent, while the Nasdaq composite index was up 0.6 percent.

Asian-Pacific stocks ended mixed Monday, but Tokyo's Nikkei index rose 1.4 percent after the coalition led by Prime Minister Junichiro Koizumi did better than expected in parliamentary elections. European markets were mixed in morning trading. (Check the latest on world markets)

Treasury prices inched up, with the 10-year note slipping to 4.45 percent from 4.46 percent Friday. The dollar edged lower against the yen and euro. Gold was higher.  

-- from staff and wire reports