Stocks retained a positive bias early Tuesday as Merck's ( MRK) shares were upgraded and DuPont's ( DD) earnings beat forecasts.

Index futures recently showed the S&P 500 trading a point above fair value, while the Nasdaq 100 was set for a 9-point gain. The 10-year Treasury bond was up 2/32 in price to yield 5.03%, while the dollar hovered against the yen and euro.

Merrill Lynch raised Merck to buy from hold a day after the drugmaker reported sharply better-than-expected earnings for its second quarter and raised guidance. The brokerage said Merck's risk/reward profile has improved over the long term, although the shares, which are up 25% this year, could see a near-term pullback.

DuPont said second-quarter earnings fell 4% from a year to $975 million, or $1.04 a share, but adjusted net of $1.01 a share were 8 cents ahead of estimates. Sales fell to $7.84 billion from $8.12 billion but matched forecasts. The company affirmed full-year guidance for earnings of $2.85 a share.

Oil rose as Secretary of State Condoleezza Rice reiterated U.S. opposition to any Mideast ceasefire that failed to preserve a "durable" peace. In electronic Nymex trading, September crude rose 41 cents to $75.46 a barrel. Gold gained $8.40 to $621.60 an ounce.

Overseas markets were higher, with London's FTSE 100 up 0.3% to 5849 and Germany's Xetra DAX adding 0.1% to 5584. In Asia, Japan's Nikkei rose 1.4% overnight to 15,005, while Hong Kong's Hang Seng gained 0.6% to 16,584.

On Monday, surging buyout volume and good earnings in the pharmaceuticals sector spurred the Dow Jones Industrial Average to a 183-point gain and the Nasdaq Composite to a 42-point rally.

At 10 a.m. EDT Tuesday, the Conference Board is expected to say its consumer confidence index fell to 104 in July from 105.7 last month, while the National Association of Realtors is expected to report existing homes sold at a 6.6 million annual clip last month, down from 6.67 million a month earlier.

To view Farnoosh Torabi's video take on today's market, click here .

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