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Pre-Market: Google Buys AI Start-Up DeepMind; Apple Earnings on Tap

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Google and its partners are forming a patent-sharing club.

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Stocks were set to erase some of Friday's steep losses ahead of Apple's (NASDAQ:AAPL) much-anticipated earnings statement.

Ahead of the opening bell, Dow (INDEXDJX:.DJI) futures were up 0.20% at 15,847. S&P 500 (INDEXSP:.INX) futures rose 0.44% to 1,790.00, a small recovery following the index's worst week since June 2012. Futures on the Nasdaq Composite (INDEXNASDAQ:.IXIC) climbed 0.19% to 3,593.00.

Shares of Caterpillar Inc. (NYSE:CAT), a global economic bellwether, rose 6.25% after announcing that it will buy back $1.7 billion in shares this quarter, and another $10 billion by late 2018. Earnings per share for the past quarter came in at $1.54, beating estimates by $0.26. Revenue of $14.4 billion also beat estimates by $790 million.

Apple's earnings will be released at the end of trading hours this afternoon. Analysts estimate that earnings per share for the most valuable company on the planet likely rose to $14.09 from $13.81 a year earlier. Revenues, driven by the popular iPhone 5S and 5C, are expected to rise 5.4% to $57.46 billion.

Google (NASDAQ:GOOG) shares waffled between losses and gains this morning after it purchased DeepMind, a British artificial intelligence company. Various reports value the deal at $400 million to $500 million. The acquired company specializes in "general-purpose learning algorithms." Its technology will bolster Google's recently acquired roster of smart machines such as Boston Dynamic's robots and smarthome technology such as Nest thermostats.

Google also signed a patent cross-licensing deal with Samsung (OTCMKTS:SSNLF) and Ericsson (NASDAQ:ERIC) yesterday. The two companies will share its patents in case it is involved in a dispute. The press release suggested that the alliance hopes to show the industry that "there is more to gain from cooperating than engaging in unnecessary patent disputes."

Moody's, the credit ratings agency, cut the credit of Sony (NYSE:SNE) to junk status, citing competition and cannibalization of the majority of its products by smartphones.

Vodaphone (NASDAQ:VOD) shares plunged 5% after AT&T (NYSE:T) stated that it will not make an offer to buy the UK mobile carrier for at least six months.

Asian stock markets dropped sharply overnight as emerging market currencies fluctuated widely. Japan reported that its trade deficit ballooned to 1.3 trillion yen ($12.7 billion) last month. Exports rose 15.3%, but the weaker yen and reliance on imported fossil fuels resulted in the widest deficit on record.

German business confidence climbed this year despite recent stock and currency volatility. The Ifo think tank's business climate index climbed for the third straight month to 110.6 this month, the highest level since July of 2011 when the eurozone debt crisis was at its most dire.

The only major data point on the US economic calendar today is new home sales for December 2013. Economists expect to hear that the pace of sales slowed to an annualized 450,000 from 464,000 in November. For the full year, new home sales are likely to have risen by 20% over 2012.

Twitter: @vincent_trivett
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