Wall Street eyes new records

NEW YORK (CNNMoney.com) -- U.S. stocks may continue to rally early Tuesday, as investors await reports on housing and car sales with the Dow Jones industrial average at a record high.

At 7:40 a.m. ET, futures were higher and pointing to a positive open for Wall Street, after being lower earlier.

The blue-chip Dow soared to a record high close of 14,087.55 on Monday, despite an earnings warning from Citigroup.

Stocks have been on a run recently on hopes that the worst of the credit crunch is over and on expectations that the Federal Reserve will keep cutting interest rates. That optimism has helped offset some weaker economic readings and earnings.

On tap for Tuesday is the August pending home sales report, due at 10 a.m. ET.

In major corporate news, Palm (Charts) reported a loss for its first quarter late Monday, although excluding items it reported earnings that edged past forecasts by a penny a share.

The maker of the Treo smartphone said results were pressured by growing competition from rival products such as Apple's iPhone, and shares lost nearly 5 percent in after-hours trading on the outlook from the company.

Yahoo! (Charts, Fortune 500) unveiled significant upgrades to its search engine on Tuesday, the latest effort in the company's battle with industry leader Google (Charts, Fortune 500).

Automakers are due to report September sales Tuesday, as they attempt to clear out the 2007 models and begin the sales of their 2008 models. Sales tracker Edmunds.com forecasts overall industry sales down 4.5 percent from year-earlier levels, with Ford Motor (Charts, Fortune 500) and Chrysler LLC expected to post doubled-digit declines.

In the latest fallout from the subprime mortgage meltdown, U.S. insurer Prudential Financial (Charts, Fortune 500) said its retirement unit filed suit in federal court Monday against State Street Corp. (Charts, Fortune 500) seeking repayment of losses on highly leveraged investments made by State Street for Prudential's clients. Prudential also said it would take an $80 million charge for reimbursing its clients for those losses.

In global trade, Asian markets rallied on Wall Street's gains. Major European markets also climbed in early trading.

The dollar rebounded higher against the euro although it fell versus the yen in early trading. Oil prices were lower in early trading.