Stocks headed for early gains

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NEW YORK (CNNMoney) -- U.S. stocks were headed for a slightly higher open Monday, looking to extend last week's advance, as investors breathed a sigh of relief that Hurricane Irene caused less damage than expected.

Dow Jones industrial average (INDU), S&P 500 (SPX) and Nasdaq (COMP) futures were up about 1% ahead of the opening bell. Stock futures indicate the possible direction of the markets when they open at 9:30 a.m. ET.

U.S. financial exchanges are planning to open normally, but trading volume could be light as the New York subway system and commuter rail services slowly return to service. And light volume could mean a choppy trading day.

But with the weather story behind them, investors will turn their attention to the damages from Irene, which was downgraded to a post-tropical cyclone.

The Northeast continues to grapple with dangerous floodwaters, widespread power outages and stranded residents. According to the most recent government model, projected economic loss from wind damage alone is forecast to top $1 billion. The figure does not account for flood and other storm damage.

Still, the damages are less dire than investors were fearing.

"Irene didn't live up to the hype, and that's a huge relief," said Hamed Khorsand, analyst at BWF Financial. "It's good for insurers, but it really comes down to the broader economy. Consumers can keep going with their regular spending habits instead of being sidetracked."

Hurricane Irene: Damage estimates roll in

Investors will also remain focused on Europe's ongoing debt problems, while bracing for the all-important monthly jobs report due on Friday.

Greece was gaining attention in the early going following reports that EFG Eurobank Ergasias and Alpha Bank -- two of the country's big lenders -- are merging. That helped boost shares of the National Bank of Greece (NBG), which surged 30%.

"Bank mergers increase deposits, and improve balance sheets," said Khorsand. "That will help avoid anything catastrophic as far as Greece's debt crisis goes."

Stocks posted healthy gains last week, ending more than 4% higher, after Federal Reserve Chairman Ben Bernanke provided some comfort to investors.

While he noted the limits of the central bank's power and called on Congress to take steps, Bernanke also said the Fed will do "all that it can." The Fed chief also extended the bank's one-day September meeting to two days "to allow a fuller discussion" of what the Fed should do.

Economy: Personal income rose 0.3% in July, while spending climbed 0.8% during the month.

Economists were expecting income to tick up 0.4%, spending to edge up 0.5%.

Pending home sales figures for June are slated to come in after the open and are expected to fall 1.4%, after rising 2.4% the prior month.

Companies: As investors consider the weaker-than-expected damages from Irene, insurance companies like Allstate (ALL, Fortune 500), MetLife (MET, Fortune 500), Chubb Corp. (CB, Fortune 500) and Travelers Companies Inc. (TRV, Fortune 500) will likely move higher.

Irene may cause gas price spike as one refinery shuts down

Shares of Travelers and Allstate rose more than 2.5% in premarket trading thanks to the weaker-than-anticipated weather.

Shares of home improvement companies such as Home Depot (HD, Fortune 500) and Lowe's (LOW, Fortune 500) are likely to enjoy a boost.

World markets: European stocks were higher in morning trading. The DAX (DAX) in Germany rose 1.2% and France's CAC (CAC) 40 climbed 1.7%. Britain's FTSE (FTSE) 100 was closed for a holiday.

Asian markets ended the session mixed. The Shanghai Composite (SHCOMP) lost 1.4%, the Hang Seng in Hong Kong (HSI) added 1.4% and Japan's Nikkei (N225) rose 0.6%.

Currencies and commodities: The dollar fell against the euro and the British pound. The buck gained ground versus the Japanese yen.

Oil for October deliver added 85 cents to $86.22 a barrel.

Gold futures for December delivery rose $22.40 to $1,819.70 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury fell slightly, pushing the yield up to 2.24% from 2.19% late Friday.