At 7:45 a.m. ET ICSC/Goldman Sachs release chain store sales for the week ended January 28, versus the prior week. In the previous week, sales fell 1.4 percent.

Redbook releases at 8:55 a.m. ET its Retail Sales Index of department and chain store sales for January versus December. In the prior period, sales fell 1.6 percent.

McGraw-Hill, the textbook publisher and owner of credit rating agency Standard & Poor's, reports financial results and is likely to update Wall Street on its steps to split the company in two. Analysts surveyed by Reuters expect earnings per share of $0.57 dollar, compared with $0.55 a year earlier.

Other key companies due to report fourth-quarter results include Exxon Mobil (XOM.N), Pfizer (PFE.N), Mattel (MAT.O), Anadarko Petroleum (APC.N), Mastercard (MA.N) and Aon (AON.N).

At 10 a.m. ET, Standard & Poor's releases its S&P Case/Shiller Home Price Index for November. Economists expect a fall of 0.5 percent, versus a 0.6 percent drop in the previous month.

A California judge has dismissed a fraud claim brought by Oracle Corp (ORCL.O) against Hewlett-Packard Co (HPQ.N) in the bitter legal battle between the two companies over the Itanium platform.

The Institute of Supply Management Chicago releases at 9:45 a.m. ET its January index of manufacturing activity. Economists forecast a reading of 63.0, compared with 62.2 in December.

RadioShack Corp (RSH.N) issued a disappointing fourth-quarter earnings forecast with "significant declines" in its Sprint wireless business. The shares of the struggling electronics retailer tumbled more than 18 percent on Monday.

The Conference Board releases at 10 a.m. ET January consumer confidence data. Economists in a Reuters survey expect a reading of 68.0 compared with 64.5 in December.

Just a week before futures brokerage MF Global (MFGLQ.PK) filed for bankruptcy, the firm's chief financial officer told analysts at Standard & Poor's that its capital position had "never been stronger," according to the ratings agency.

The Treasury Department is investigating a report that Freddie Mac (FMCC.OB), the mortgage giant, bet against homeowners' ability to refinance their loans even as it was making it more difficult for them to do so, the New York Times reported, citing White House spokesman, Jay Carney.

CIT Group Inc (CIT.N) will again stop providing loans to suppliers of Sears Holdings Corp (SHLD.O) after Tuesday as the business lender awaits more information on the retailer's financial health, two retail sources told Reuters on Monday.

Pharmaceutical wholesaler McKesson Corp (MCK.N) on Monday reported higher-than-expected quarterly earnings, fuelled by growth in its core drug distribution business. Its shares rose 3 percent in late trading.

German Chancellor Angela Merkel cemented her political ascendancy in Europe on Monday when 25 out of 27 EU states agreed to a German-inspired pact for stricter budget discipline, even as they struggled to rekindle growth from the ashes of austerity.

Greek Prime Minister Lucas Papademos said negotiators had made "significant progress" in talks to strike a restructuring deal for Greek government debt, with the aim of having a definitive agreement by the end of this week.

European shares .FTEU3 rose 0.6 percent in early trade on hopes Greece was nearing a debt swap deal needed to avoid a messy default.

On Monday, the Dow Jones industrial average .DJI dropped 6.74 points, or 0.05 percent, to 12,653.72. The Standard & Poor's 500 Index .SPX lost 3.31 points, or 0.25 percent, to 1,313.02. The Nasdaq Composite Index .IXIC fell 4.61 points, or 0.16 percent, to 2,811.94.

(Reporting By Francesco Canepa)

• A Permanent Economic Emergency