Futures Fall on Economic Outlook, Oil Price Drop
Futures indicated a drop of more than 1 percent at the opening bell for Wall Street as investors fretted over the global economic outlook after the World Bank cut its 2009 forecasts for most economies.
"We see a very difficult 2009, with negative growth in the OECD area. Unemployment problems are going to continue to linger," Angel Gurria, the head of the Organization for Economic Cooperation and Development told Reuters television in an interview on the sidelines of a conference in Paris.
The Federal Reserve's policy-setting Open Market Committee meet on Tuesday and Wednesday and investors are keen to hear what the central bank plans to do about the recent rise in Treasury debt yields and its debt buyback program.
Also in the spotlight will be the $104 billion in U.S. Treasury debt to be auctioned off this week.
In earnings, drug store chain Walgreens said its profit dropped to 53 cents per share, slightly below Wall Street's expectations. Shares fell 3 percent premarket.
Shares of gun makers also fell after Barron's said a threat from the Obama administration to reinstitute weapons bans would hurt sales, which jumped after the election.
Smith & Wesson shares fell 4.6 percent while Sturm Ruger fell 3.8 percent.
Banks also were lower, with Bank of America off nearly 2 percent and JPMorgan Chase down about 1 percent in premarket trading.
Basic resource stocks in Europe and Asia got a boost after UK miner Xstrata said on Sunday it wanted to merge with rival Anglo American in a deal that would equal about $68 billion.
Energy stocks were lower as crude oil's price fell toward $68 a barrel from a selloff in U.S. gasoline market as dealers bet there would be ample fuel supply in the country to meet demand from summer vacationers.
ExxonMobil dropped 1 percent in light premarket trading even as the company said it is nearing agreement with three major buyers on its liquefied natural gas project in Papua New Guinea.
"In the absence of any economic figures today, it feels like there is a bit of a buyers' strike rather than concerted selling," analyst GFT wrote. "Although Asia was a touch higher, shares in the UK and Europe are weaker this morning and this is reflected in early trade on U.S. stock
The technology sector was one of the biggest losers Monday after sources told CNBC that Apple CEO Steve Jobs had a liver transplant two months ago and is due to return to work later this month. Apple refused to confirm.
Two housing-related economic reports are on the agenda Monday morning: the National Association of Realtors will issue its May report on existing home sales, with economists looking for a rise of 2.6% from April levels. And the Federal Housing Finance Agency is out with its monthly Home Price Index, expected to show a drop of 0.3%. Both of those reports are out at 10am New York time.