Kickoff to gains?

Lower oil prices could help, but the market's recent rally poses a threat.

February 7, 2005: 6:45 AM EST

NEW YORK (CNN/Money) - A pullback in oil prices Monday combined with strength in the dollar could put stocks in rally mode at the start of a new trading week on Wall Street.

Early Monday, Nasdaq and S&P futures were modestly higher but not enough to overcome the negative impact of fair value.

Oil prices fell as several OPEC members indicated there won't be any production cuts until atleast the cartel's scheduled meeting next month. U.S. crude slipped 33 cents to $46.15 a barrel in electronic trading, and looked to test a $46-a-barrel floor; Brent crude was down 10 cents to $43.79.


Asian markets ended higher Monday, with Tokyo's Nikkei index up 1.2 percent. European stocks rose in early trading. (check world markets here)

Treasury prices were slightly higher, with the 10-year note yield down to 4.07 percent from 4.08 percent late Friday. The dollar rose to a 3-month high against the euro and gained versus the yen.

U.S. stocks finished the week Friday with solid gains in response to comments by Fed Chairman Alan Greenspan that the nation's trade gap could be ready to stabilize and possibly decline.

A weaker-than-expected jobs growth report for January also helped convince investors that interest rates won't be rising faster than the Fed's current measured pace.

In corporate news, Anheuser-Busch (Research) was perceived to have put forth the best ad in Sunday's Super Bowl telecast, according to the annual ad meter reading done for USA Today. Shares of the maker of Budweiser and other beers closed Friday at $48.53.

Records from drugmaker Merck (Research) show that a committee monitoring the safety of arthritis drug Vioxx in a clinical trial had early data suggesting users could be at increased risk of heart problems after as little as four months, the Wall Street Journal reported Monday.

Merck withdrew its blockbuster arthritis treatment last year after a long-term clinical trial showed it doubled the risk of heart attack and strokes in patients.

The torrid pace of quarterly results slows down somewhat this week. Among the earnings reports of note this week, investors will be keenly awaiting word from two tech components, Cisco Systems (Research) on Tuesday and Dell (Research) on Thursday.

On Thursday the government releases U.S. trade data for December, and economists expect the deficit to fall to $57.10 billion from November's record $60.30 billion.

A handful of economic updates are also on tap for this week, including the U.S. trade data for December, expected on Thursday. Economists expect the deficit to fall to $57 billion from November's record $60.30 billion, according to economists surveyed by Briefing .com.