Wall St. tries to earn some gains

NEW YORK (CNNMoney.com) -- U.S. stocks could get a lift from some strong earnings reports Tuesday, alhead of the start of a two-day meeting of Federal Reserve policy makers in Washington.

At 8:20 a.m. ET, S&P and Nasdaq futures were higher.

Diversified manufacturer 3M (Charts), a Dow component, reported improved fourth quarter results that beat forecasts, although it said a slowing global economy could lead to 2007 results to fall below forecasts.

Consumer products maker Procter & Gamble (Charts), another Dow component, also topped forecasts with its earnings, although drugmaker Merck (Charts) fell a penny a share short of forecasts in its earnings report.

Peter Cardillo, chief market economist for Avalon Partners, said he thinks that the earnings reports could give a lift to investors in early trading. But he added that he expects markets to be somewhat flat Tuesday as investors await not only the Fed's statement on its outlook for inflation and economic growth Wednesday afternoon, but a bevy of economic reports the rest of the week.

"I kind of suspect that the investors will continue to be somewhat cautious," he said. "There's an avalanche of economic data that investors will have to sort through the next four days."

Oil was higher. U.S. light crude gained 33 cents to $54 34 a barrel in electronic trading, on a report in the Wall Street Journal that Saudi Arabia will reduce production by another 158,000 barrels per day beginning Thursday and more cuts are on the way.

Treasury prices rose. The 10-year note yield eased to 4.88 percent from 4.89 percent late Monday. The dollar was narrowly lower against the yen and little changed against the euro in early trading ahead of the Fed meeting. The U.S. central bank is widely expected to leave rates unchanged.

In overseas markets, stocks in Asia closed mostly higher, while major indexes in Europe were lower in early trading.

The only economic report due Tuesday is a 10 a.m. ET reading on consumer confidence from the Conference Board. Economists surveyed by Briefing.com forecast the confidence index edged up to 110 from 109 in December.

In other earnings news, Sony (Charts) posted a slight decline in earnings after the close of trading in Japan, but the electronics and entertainment conglomerate raised its full-year earnings outlook.

By contrast U.S. Steel (Charts) reported better than expected fourth quarter earnings that were nearly triple year-earlier results, but warned that it couldn't maintain that pace of earnings in the first quarter. Shares of U.S. Steel still gained 0.8 percent in after-hours trading.

Microsoft (Charts) launched the consumer version of Vista, the update of its Windows operating system, Tuesday. Chairman Bill Gates will appear on CNN's American Morning as part of the rollout.

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