Bulls keep their head up

NEW YORK (CNNMoney.com) -- Major gauges looked to open higher Tuesday as some good earnings and talk about a bid for a Dow component offset news that U.S. trade gap hit a record level last year.

At 8:45 a.m. ET, Nasdaq and S&P futures were slightly higher.

Stock futures eased slight after the Commerce Department reported that the U.S. annual trade gap grew to a record $763.3 billion during 2006, while the monthly reading topped forecasts, hitting $61.2 billion in December.

Economists surveyed by Briefing.com forecast that the monthly gap edged higher to $59.5 billion, with the annual deficit reading of more than $750 billion.

Oil prices turned higher Tuesday, following a big drop Monday. U.S. light crude gained 18 cents to $57.99 a barrel in electronic trading.

Treasury prices were slightly higher, with the yield holding around 4.8 percent late Monday. The dollar was lower against the yen and the euro in early trading.

Overseas, stocks in Asia were mixed with Japan's Nikkei reaching its highest level in nearly seven years, while major indexes lost ground in Hong Kong, Singapore and Taiwan. Stocks in Europe edged higher in early trading.

Shares of Dow component Alcoa (Charts) were up nearly 9 percent in Frankfurt trading early Tuesday after the Times of London reported that mining giants BHP Billiton and Rio Tinto have drawn up separate plans for a $40 billion takeover of the leading U.S. aluminum producer.

Art Hogan, chief market analyst at Jefferies & Co., said that the Alcoa report feeds the expectations of the busy merger and acquistion activity that has been helping to take markets higher so far in 2007.

"You get a Dow component that is rumored to be taken out and that obviously is going to move the futures higher," he said.

But he's thinks that investors will be cautious overall during the trading day Tuesday as they await the Capitol Hill testimony of Federal Reserve Chairman Ben Bernanke set for Wednesday and Thursday.

"We certainly have a clear picture as to his mindset -- he's been fairly transparent in his comments," said Hogan. "The fear is we have an embolden Congress that he is coming before and perhaps the Q & A portion may bring some surprises."

Sanofi-Aventis (Charts) reported lower earnings and said that it should see the same level of growth in 2007 that it saw last year. Shares of the drugmaker fell 2 percent in Paris trading on the report.

Priceline.com (Charts) saw shares rise 6 percent following an after-hours earnings report Monday that was far better than forecasts.

Yum Brands (Charts), the operator of fast food chains such as KFC, Pizza Hut and Taco Bell, also reported a better-than-expected rise in earnings for the fourth quarter, a period that saw 70 people fall sick because of the E. coli outbreak linked to Taco Bell restaurants.

Johnson & Johnson (Charts) revealed that that its non-U.S. subsidiaries had made improper payments in connection with the sale of medical devices in two small-market countries and said its worldwide chairman of medical devices and diagnostics had retired.

Speciality retailer Pier 1 Imports (Charts) said Monday it filed a suit against TJX Cos. (Charts), the parent company of retailer chains TJ Maxx and Marshalls, seeking to block a threatened lawsuit from TJX over the employment of Pier 1's new president and CEO Alex Smith, who is due to start his new position Feb. 19. Smith had been a senior executive officer at TJX.

The Wall Street Journal reported that Time Warner (Charts), the parent of CNNMoney.com, has finalized a long-rumored deal to sell the Atlanta Braves baseball team to Liberty Media Corp. (Charts), a deal that would value the team at about $450 million. The deal would include Liberty giving up 60 million shares of Time Warner it now holds, valued at about $1.3 billion, while Time Warner would also give Liberty a group of craft magazines.

-----

Check premarket activity