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Index futures up as oil rises on Israeli attacks

Oil prices rose to more than $40 per barrel, while the price of gold also surged as Israeli warplanes hit the Hamas-ruled Gaza Strip for a third day and Israel prepared to launch a possible invasion.

Shares of Exxon Mobil rose 1.3 percent to $78.16 before the opening bell, while Chevron was up 1.2 percent at $71.20.

However, Kuwait's decision to end a $17.4 billion petrochemical joint venture with Dow Chemical, possibly upsetting Dow's plans to buy rival Rohm & Haas, could weigh on the market.

Shares of Dow were down 8.2 percent at $17.75 in premarket trade, while Rohm & Hass tumbled 17.6 percent to $52.40.

"It's going to be a quiet week with a focus on (upcoming) earnings and the geopolitical concerns we have in the Middle East," said Andre Bakhos, president of Princeton Financial Group in Princeton, New Jersey.

"Over the recent months, analysts have been ratcheting down their earnings forecasts so now the game is to beat the revised numbers."

S&P 500 futures rose 1.50 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures climbed 25 points, and Nasdaq 100 futures added 3.50 points.

Trading was expected to be light throughout the week shortened by the New Year's holiday. The market has been unable to mount a significant year-end rally that many investors had hoped for.

The broad S&P 500 is down about 40 percent for the year, putting it behind 1931's 47.1 percent record drop. But investors are hopeful the incoming White House administration will bring another stimulus package to help steer the United States out of a year-long recession.

President-elect Barack Obama has said signing a major economic stimulus package will be his priority when he takes over the presidency on Jan. 20.

Over the weekend, one of Obama's top economic advisors said financial policy should address both immediate job creation and longer-term investment needs.

Lawrence Summers, Obama's pick to head the White House National Economic Council, said spending government money solely to stimulate consumer spending would be a short-sighted mistake.

A consortium of private equity and hedge fund firms, including J.C. Flowers & Co is close to a deal to buy the assets of failed mortgage lender IndyMac, according to a source familiar with the matter.