Stocks poised to pull back

NEW YORK (CNNMoney) -- U.S. stocks were poised to head lower Wednesday, as investors mulled over signs of an improving job market.

Dow Jones industrial average (INDU), S&P 500 (SPX) and Nasdaq (COMP) futures were all lower ahead of the opening bell. Futures measure current index values against perceived future performance.

Futures had been lower all morning, taking their cue from a sell off in European markets. But the losses abated following a strong report on private sector payrolls.

The major indexes ended a tumultuous session mixed Tuesday as investors mulled over reports on auto sales, factory orders and the Federal Reserve's December meeting.

Stocks have been on quite a roll, ending 2010 with double-digit gains. It might be tough to keep that momentum going, say analysts, especially as investors wait on tenderhooks for the government's closely-watched jobs report due Friday.

"The unemployment number is really the most important thing at this point, so there's a little bit of caution," said Philip Isherwood, equities strategist at Evolution Securities. "There's a temptation to take profits after having the best December since 1991, but strong economic data could change people's mind -- we started the week with gains, and we could end the week with gains too."

Economy: Before the opening bell, outplacement firm Challenger Gray & Christmas reported that planned job cuts fell 59% to 530,000 in 2010, the lowest level in 13 years.

Meanwhile, private sector payrolls soared by 297,000 in December, according to a separate report from payroll processor ADP. Economists surveyed by Briefing.com were expecting the report to show that payrolls increase by 100,000 last month, compared to November's 93,000 rise.

The two reports could set the tone ahead of the Friday's monthly jobs report. Economists expect employers boosted payrolls by 135,000 last month, following a 39,000 increase in November.

After the opening bell Wednesday, a report from the Institute of Supply Management is forecast to show that activity picked up in the service sector last month. Economists surveyed by Briefing.com expect the ISM Non-manufacturing Index to register at 55.7, compared to November's 55.0 reading.

Also on the docket is a mid-morning report on crude oil inventory levels.

Meanwhile, Republican and Democratic leaders launch the 112th Congress at noon. The new Congress pledges to make job creation its first priority.

Companies: Wireless tech giant Qualcomm (QCOM, Fortune 500) agreed to buy chip maker Atheros Communications (ATHR) for $3.1 billion in cash, or $45 per share, a 22% premium over Atheros' closing price on Monday. Shares of Atheros rose 1.8% in premarket trading, while Qualcomm's stock edged up 0.6%.

World markets: European stocks retreated in morning trading. Britain's FTSE 100 fell 0.7%%, the DAX in Germany tumbled 1.6% and France's CAC 40 slipped 1.4%.

Asian markets ended the session mixed. The Shanghai Composite ticked down 0.5%, Japan's Nikkei fell 0.2%, while the Hang Seng in Hong Kong rose 0.4%.

Currencies and commodities: The dollar rose against the euro, the Japanese yen and the British pound.

Oil for February delivery slipped $1.15 to $88.23 a barrel.

Gold futures for February delivery fell 90 cents to $1,377.90 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury rose, pushing the yield down to 3.30%, from 3.34% late Tuesday.