Wall Street stock futures flattened Monday after Caterpillar lowered its earnings outlook, offsetting optimism over a big merger in the pharmaceutical sector.

Caterpillar said it would cut 20,000 jobs and warned on its 2009 results.

Dow component McDonald’s reported a 23% slide in profits.

In M&A news, pharmaceutical giant Pfizer Inc. is buying rival drugmaker Wyeth in a US$68 billion cash-and-stock deal that could reshape the drug development industry.

Pfizer also said its net income for the fourth quarter dropped 90% from a year ago, hurt by a charge to resolve investigations into off-label promotional practices.

It’s a heavy week for U.S. earnings report with 137 S&P 500 components due to report.

In Canadian earnings news, Industrial Alliance Insurance and Financial Services Inc. posted a fourth-quarter loss of $110.2 million, reversing year-earlier profit of $63.1 million.

In commodities news, oil futures traded near Friday’s close of US$46.47. Gold futures were up US$10.20 to US$906 an ounce in recent trading.

Overseas, European stocks advanced, with gains for banks leading the FTSE 100 up by 1.4% in London.

Japanese stocks ended at their lowest levels in nearly three months on Monday, though many other Asian markets were shut for the Lunar New Year. The Nikkei 225 ended 0.8% lower.

On Friday, Toronto stocks recovered from early-day losses to land firmly in positive territory on Friday, as commodity prices advanced and posted gains for the week.

The S&P/TSX composite index rose 141.41 points, or 1.7%, to end at 8,627.97. For the week, the benchmark index was down 292 points, or 3.3%.

Shares of HudBay Minerals surged 24.2% after the Ontario Securities Commission ordered that HudBay receive shareholder approval before proceeding with its planned $550-million takeover of Lundin Mining. HudBay shares rose 85¢ to $4.37.

Shares of Lundin Mining Corp. plunged 22.7% to $0.92.

The S&P/TSX Venture composite rose 9.48 points, or 1.1%, to end at 859.69.

In New York, U.S. stocks finished mostly higher on Friday, with investors displaying optimism as the government moved closer to consensus on the massive economic stimulus package. Still, U.S. equities were down for the week.

The Dow Jones industrial average fell 45.24 points, or 0.6%, to 8,077.56, leaving the blue chip benchmark down by 2.5% for the week.

The S&P 500 index rose 4.45 points, or 0.5%, to finish at 831.95. For the week, it slipped 2.1%.

The Nasdaq composite gained 11.8 points, or 0.8%, to 1,477.29, to finish the week off 3.4%.

IE