(Updates futures; adds economic data, comment)
By Denise Duclaux
NEW YORK, April 21 (Reuters) - Stocks are set for a flat start on Monday as investors brace for an onslaught of earnings reports that could offer more clues on how corporate profits are faring against the lackluster economic backdrop.
"It's going to be a slow start," said Larry Wachtel, a market analyst at Prudential Securities. "We have a second week of a deluge of earnings, and that's going to be the primary factor."
Investors straggled back from a three-day Easter holiday weekend to the most hectic week of the first-quarter earnings season. One-third of the Standard & Poor's 500 companies will post earnings this week, including phone companies AT&T Corp. and SBC Communications Inc. , film provider Eastman Kodak Co. and jet maker Boeing Co. .
Companies on average have topped Wall Street's expectations so far. But market watchers warn that some companies are meeting analysts' targets mainly through drastic cost cutting, and they say they are still waiting for signs of a solid recovery. Companies are proving hesitant to offer concrete outlooks for coming quarters, still struggling to gauge demand in an economy just beginning to emerge from the shadow of war.
Equity futures pointed to a tepid start on Monday after the market was shut on Friday. Futures for the Standard & Poor's 500 index edged up 1.70 points to 892.90. Nasdaq 100 futures gained 2.50 points to 1,085.50, while Dow Jones industrial futures rose 5 points to 8,315. The Nasdaq 100 pre-market indicator shed 0.02 percent.
The next clue to the state of the U.S. economy comes at 10:00 a.m. (1400 GMT) when the March leading indicators report will be released. The market is looking for a slight decline of 0.1 percent compared with a previous drop of 0.4 percent.
"That could decide the early direction of the market," said Harry Michas, stock index futures trader at manmarketmonitor.com.
European markets, which were also closed on Friday, remained shut on Monday for Easter. Japanese stocks ended up for a second session on Monday, but trade was thin ahead of a glut of earnings reports.
The quarterly reports were already starting to flood Wall Street early on Monday.
Merck & Co Inc. , a Dow component, on Monday before the open said its first-quarter profit rose on stronger sales of drugs for asthma, hypertension and arthritis, and easy comparisons from a poor performance in the year-ago quarter. Shares closed at $55.89 on Thursday.
Industrial conglomerate 3M Co. , another Dow member, said on Monday its quarterly earnings rose, helped by increased productivity, cost controls and the weaker U.S. dollar. Shares ended at $129.98.
Whirlpool Corp. , the largest U.S. home appliance maker, on Monday before the open posted a first-quarter profit as consumers continued to buy its high-priced products. The company also warned that full-year earnings will not meet its earlier view. Shares closed at $53.68.
In other corporate news, Intel Corp. , the world's largest chip maker, said on Sunday it cut the prices of its fastest microprocessors for desktop and laptop PCs by as much as 38 percent, following its regular pattern of slashing the cost of its chips in advance of faster models. Shares closed at $18.66.
Xilinx Inc. , a top designer of programmable microchips, on Thursday after the close posted higher quarterly profits and forecast that chip sales outside the battered communications market would drive current-quarter revenues past Wall Street expectations. Xilinx ended at $26.07 on Thursday.
The Dow added 80.04 points, or 0.97 percent, to 8,337.65 on Thursday. The Dow is now just a shade lower for the year, down less than 4 points. The technology-laced Nasdaq Composite Index shot up 30.78 points, or 2.21 percent, to 1,425.50. The broader Standard & Poor's 500 Index gained 13.67 points, or 1.55 percent, to 893.58.
For the week, the Dow rose 1.6 percent, the Nasdaq gained 4.9 percent and the S&P 500 index advanced 2.9 percent. (With additional reporting by Doris Frankel)