Shares to Open Lower as Spain Asks For Bailout
Stock market futures pointed to more Wall Street woes, with equities under pressure from a Spanish bailout request ahead of this week's European summit.
The Dow fell about 1 percent last week, while the Standard & Poor's 500 dropped 0.6 percent. The Nasdaq tech barometer actually gained 0.7 percent, but the broader tenor of the market was negative due both to the problems in Europe and a weakened domestic economic picture.
Markets looked for more direction from Europe and awaited a possible ruling from the U.S. Supreme Court on the future of President Obama's nationalized health care plan.
With so much uncertainty on the horizon, markets are likely to be volatile through the summer.
"We still believe the global equity markets will trace out a very choppy advance during the second half of the year," said Sam Stovall, chief equity strategist at Standard & Poor's. "As a result, we think investors will continue to drive with their low beams on, being willing to make only short-term investment commitments."
Futures indicated an opening decline approaching 1 percent.
European leaders meet Thursday to discuss policy responses to the ongoing sovereign debt crisis. There were concerns that little will be achieved at the two-day Summit however, despite the leak of a memo which appeared to outline specific steps towards creating a cross border banking union, closer fiscal integration and the possibility of a debt redemption fund.
German chancellor Angela Merkel and French president Francois Hollande are expected to clash over his proposals to introduced common bonds across the euro zone, with Merkel expected to stand firm in her stance against them.
Newly electedGreek Prime Minister Antonis Samaras will not be in attendance at the Summit as he is recovering from an eye operation he underwent the weekend.
A planned meeting between representatives of the troika — the European Union, International Monetary Fund and European Central Bank — and Greek ministers, due to take place on Monday, was postponed as a result.
European shares fell while Spanish borrowing costs rose on Monday and the euro weakened broadly on investor skepticism that the Summit would make any substantial progress, with the crisis now in its third year and engulfing Spain, the region's fourth largest economy.
But Jim O'Neill, chairman at Goldman Sachs Asset Management, told CNBC that investors ought to be more concerned with issues in the U.S. than in Europe. Instead, he said, elevated weekly jobless claims are showing that the U.S. economy remains fragile.
"Europe doesn't run the world," he said. There are "lots of other issues going on in the world and it doesn't begin and end with Europe."
In corporate news Research In Motion, which is scheduled to report quarterly earnings later this week, is considering separating out its handset manufacturing business from its messaging network, according to a report in the Sunday Times.
The paper reported Amazon.com and Facebook could be potential buyers. Shares gained 1.3 percent in electronic premarket trading.
And Google’s chief executive Larry Page moved to reassure employees about his health after missing the company’s annual shareholders meeting last week.
He will also miss two other upcoming appearances because of unspecified problems that have caused him to lose his voice. Page told employees there was “nothing seriously wrong”.
The only economic data released on Monday are new home sales figures for May at 10 a.m. New York time. Economists polled by the website briefing.com said they expected annual sales to have ticked up slightly in the month to 350,000 units from April’s 343,000.