Stocks set for a struggle
Record high oil prices weigh on Wall Street; Fannie Mae earnings on deck.
LONDON (CNNMoney.com) -- U.S. stock futures wavered early Tuesday as recent optimism about the economy was offset by record high crude prices.
At 5:20 a.m. ET, S&P futures were little changed and pointing to a flat start for Wall Street.
Stocks tumbled Monday as investors worried about the collapse of several deals and surging crude prices.
High oil prices are likely to knock sentiment again Tuesday. Oil futures rose to a new trading high near $121 a barrel in electronic trading.
The recent surge in crude prices come amid growing hopes that the downturn in the U.S. may not be as deep as originally feared.
No major economic readings are due Tuesday, but investors will take in a string of earnings. Fannie Mae (FNM, Fortune 500) is due to report before the opening bell. Disney and Cisco Systems post results after the market close.
Investors will be watching for the latest in the fallout of the failure of Yahoo (YHOO, Fortune 500) and Microsoft (MSFT, Fortune 500) to reach a deal. Yahoo CEO Jerry Yang is still open to a Microsoft takeover, as long as the price is right, according to published reports. Yahoo shares fell as much as 20% Monday after Microsoft withdrew its bid.
In major corporate news, Bank of America (BAC, Fortune 500) is committed to its takeover of Countrywide Financial (CFC, Fortune 500), according to a report in the Wall Street Journal. Doubts about the deal grew Monday after an analyst said the bank should ditch the merger.
Swiss banking giant UBS said it plans to cut 5,500 jobs after posting an expected $11 billion quarterly loss.
Merck (MRK, Fortune 500) said Monday that it plans to cut 1,200 sales positions. The announcement, which was made after the market close, helped push the stock higher in after-hours trading.
In global trade, Asian markets drifted as investors eyed the decline on Wall Street. Markets in Japan were closed. European stocks fell in early trading. 
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