By William L. Watts and Kate Gibson , MarketWatch
NEW YORK (MarketWatch) â€" U.S. stock futures held on to small gains Monday as investors prepared for the kick-off of earnings season and as cooling operations at Japan’s damaged nuclear-power complex resumed in the wake of an aftershock to last month’s earthquake.
Futures on the Standard & Poor’s 500 index /quotes/comstock/21m!f:sp\m11 (SPM11 1,327, +3.60, +0.27%)  rose 2.1 points to 1.325.9, while Nasdaq 100 futures /quotes/comstock/21m!f:nd\m11 (NDM11 2,317, -1.00, -0.04%)  gained 7.25 points to 2,325.25.
Dow Jones Industrial Average futures /quotes/comstock/21b!f:dj\m11 (DJM11 12,380, +54.00, +0.44%) Â added 18 points to 12,344. On Friday, the Dow /quotes/comstock/10w!i:dji/delayed (DJIA 12,418, +38.94, +0.31%) Â ended with a loss of 29.44 points to 12,380.05, making for a flat performance on the week.
Japan's suppliers struggle
Japanese suppliers impacted by last month's quake are struggling to hang on to their business amid shortages of key components and electricity. .
A key question for investors will be whether companies trim their 2011 forecasts as inflation squeezes margins, said Michael Hewson, market analyst at CMC Markets.
Signs that the interest-rate cycle is beginning to turn toward tightening may also leave investors wary of pressing gains at current levels, he said.
Expectations for the U.S. Federal Reserve to conclude its second round of quantitative easing in June may continue to hang over the market, leaving investors to wonder “what happens when the sugar rush of that liquidity†is withdrawn, he said.
Alcoa earnings due
Earnings season kicks off after Monday’s closing bell with the release of Alcoa Inc.’s /quotes/comstock/13*!aa/quotes/nls/aa (AA 18.02, +0.10, +0.56%)  latest results, which are expected to have benefited from a strong rise in aluminum prices. On average, analysts surveyed by FactSet Research expect Alcoa to report a quarterly profit of 27 cents a share on revenue of $6.14 billion. Read more about upcoming earnings season.
“Risk appetite as a driver might be tested more thoroughly this week. Indeed, the [first-quarter] U.S. earnings season kicks off and the three main U.S. indices are at or near highs,†wrote strategists at KBC Bank in a note.
“So, investors will have to make up their mind and decide whether the earnings and the economic outlook warrant another up-leg [for] equities or whether the steep rally that started at the end of August ... is over and correction time has arrived,†they said.
No major U.S. economic data are set for release Monday, while Federal Reserve Vice Chair Janet Yellen is scheduled to speak in New York.
In corporate news, Minnesota-based American Medical Systems Holdings Inc. /quotes/comstock/15*!ammd/quotes/nls/ammd (AMMD 29.46, +7.13, +31.93%)  said it will be acquired by Pennsylvania-based Endo Pharmaceuticals Holdings Inc. /quotes/comstock/15*!endp/quotes/nls/endp (ENDP 42.75, +1.90, +4.65%)  for $30 a share. The deal is valued at $2.9 billion, including Endo’s assumption of $312 million of American Medical Systems’ debt.
Wal-Mart Stores Inc. /quotes/comstock/13*!wmt/quotes/nls/wmt (WMT 52.87, +0.33, +0.62%) , the world’s largest retailer, said Monday that it would implement a range of new competitive measures, including a plan to work more closely with suppliers to cut costs and to check competitors’ pricing more often.
The board of NYSE Euronext Inc. /quotes/comstock/13*!nyx/quotes/nls/nyx (NYX 37.90, -0.80, -2.07%) Â on Sunday rejected the unsolicited $11.3 billion takeover offer from Nasdaq OMX Group Inc. /quotes/comstock/15*!ndaq/quotes/nls/ndaq (NDAQ 28.13, -0.33, -1.14%) Â and IntercontinentalExchange Inc. /quotes/comstock/13*!ice/quotes/nls/ice (ICE 121.22, +0.67, +0.56%) .
NYSE affirmed its commitment to its planned merger with Deutsche Boerse AG /quotes/comstock/11i!dboey (DBOEY 7.90, +0.05, +0.64%) Â /quotes/comstock/11e!fdb1 (DE:DB1 55.00, +0.53, +0.97%) . Read about NYSE's rejection of the Nasdaq-ICE bid.
International markets
In Japan, an earthquake briefly interrupted cooling operations around the damaged Fukushima Daiichi nuclear-power plant. The aftershock rattled northeastern Japan on the one-month anniversary of the devastating March 11 earthquake and tsunami. The quake had a preliminary magnitude of 7.1 but was later downgraded to 6.6.
The quake came after Japan widened the evacuation zone surrounding the damaged plant. Read more about latest Japan quake.
European markets extended losses after Japan’s earthquake.
British banks gained ground, however, after the nation’s Independent Commission on Banking called on banks to ring-fence consumer operations but stopped short of calling for the formal separation of retail- and investment-banking units. Read more about proposed U.K. bank reforms.
Most Asian equity markets declined, with Japanese stocks losing ground after data showed a sharper-than-expected fall in core machinery orders. Read "BHP boosts Sydney, but most Asian stocks fall."
Crude oil edged lower, with Nymex futures /quotes/comstock/21n!f:cl\k11 (CLK11 111.48, -1.31, -1.16%) Â down $1.1 to $111.69 a barrel in electronic trade.
The euro /quotes/comstock/21o!x:seurusd (EURUSD 1.4451, -0.0004, -0.0277%) Â was lower versus the U.S. dollar at $1.4423, while the greenback was off versus the Japanese yen /quotes/comstock/21o!x:susdjpy (USDYEN 84.5700, -0.2900, -0.3417%) Â to trade at 84.64 yen.
/quotes/comstock/21m!f:sp\m11
SP500 IDX JUN1 (SPM11)
$
1,327
Change
+3.60
+0.27%Volume
1,555
Real time quotes
/quotes/comstock/21m!f:nd\m11
NASD 100 JUN1 (NDM11)
$
2,317
Change
-1.00
-0.04%Volume
31.00
Real time quotes
/quotes/comstock/21b!f:dj\m11
DJ IND AVG JUN1 (DJM11)
$
12,380
Change
+54.00
+0.44%Volume
20.00
Real time quotes
/quotes/comstock/10w!i:dji/delayed
Dow Jones Industrial Average (DJIA)
12,418
Change
+38.94
+0.31%Volume
40.69m
Real time quotes
/quotes/comstock/13*!aa/quotes/nls/aa
Alcoa Inc (AA)
$
18.02
Change
+0.10
+0.56%Volume
14.84m
Real time quotes
/quotes/comstock/15*!ammd/quotes/nls/ammd
American Medical Systems... (AMMD)
$
29.46
Change
+7.13
+31.93%Volume
33.43m
Real time quotes
/quotes/comstock/15*!endp/quotes/nls/endp
Endo Pharmaceuticals... (ENDP)
$
42.75
Change
+1.90
+4.65%Volume
3.80m
Real time quotes
/quotes/comstock/13*!wmt/quotes/nls/wmt
Wal-Mart Stores Inc (WMT)
$
52.87
Change
+0.33
+0.62%Volume
3.29m
Real time quotes
/quotes/comstock/13*!nyx/quotes/nls/nyx
NYSE Euronext Inc (NYX)
$
37.90
Change
-0.80
-2.07%Volume
3.01m
Real time quotes
/quotes/comstock/15*!ndaq/quotes/nls/ndaq
NASDAQ OMX Group Inc (NDAQ)
$
28.13
Change
-0.33
-1.14%Volume
976,366
Real time quotes
/quotes/comstock/13*!ice/quotes/nls/ice
IntercontinentalExchange Inc (ICE)
$
121.22
Change
+0.67
+0.56%Volume
194,892
Real time quotes
/quotes/comstock/11i!dboey
Deutsche Boerse AG (DBOEY)
$
7.90
Change
+0.05
+0.64%Volume
8,127
Real time quotes
/quotes/comstock/11e!fdb1
Deutsche Boerse AG (DB1)
€
55.00
Change
+0.53
+0.97%Volume
5,014
Real time quotes
/quotes/comstock/21n!f:cl\k11
LIGHT CRUDE MAY1 (CLK11)
$
111.48
Change
-1.31
-1.16%Volume
155,081
Real time quotes
/quotes/comstock/21o!x:seurusd
Euro vs. US Dollar (EURUSD)
1.4451
Change
-0.0004
-0.0277%Volume
0.0000
Real time quotes
/quotes/comstock/21o!x:susdjpy
US Dollar vs. Japanese Yen (USDYEN)
84.5700
Change
-0.2900
-0.3417%Volume
0.0000
Real time quotes
William L. Watts is a reporter for MarketWatch in London. Kate Gibson is a reporter for MarketWatch, based in New York.
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