Futures Fall on Banking, Greece Worries 


U.S. stock index futures were lower ahead of the open Monday as investors were still reeling from Friday's news that the Securities and Exchange Commission charged Goldman Sachs with fraud.

But Citigroup could help turn market sentiment, as the resurgent banking giant reported earnings of 15 cents a share that were well ahead of expectations. Citi shares briefly gained 2 percent in premarket trading but then turned flat.

Adding to the disruption ahead of the open was continued travel chaos as the UK's MET Office forecast the volcanic-ash plume could hit the east coast of North America during the morning New York time.

The ash cloud from an Iceland volcanic eruption grounded an IMF delegation set to travel to Greece, sending the spread on the troubled nation's bonds to record levels and pushing the cost of credit default swaps higher. Asian stocks closed lower and Europe was down as well from pressure on bank shares.

Still, the losses were fairly modest, with the major indexes each indicating drops of about 0.4 percent at the open.

Goldman shares fell 1.2 percent in premarket trading, while Citigroup was flat and Bank of America was off 0.8 percent.

Leading Bank Stocks

Citi is expected to post first-quarter earnings in line with the same period a year earlier at 12 cents per share.

Commodities were taking a hit, with US light, sweet crude oil falling as much as $2.50 a barrel to below $81.

Banking stocks suffered sharp declines during Friday's session on fear of a flurry of fraud charges hitting the industry. But investors should "wait and see" how the market reacts before taking big positions, independent trader Sebastian Manby told CNBC.com. 

"You could have a dead-cat bounce… You've got to wait and see how people respond to Friday's news. There might be another leg up," Manby said.

Dodge Dorland, CIO of Landor and Fuest Capital Managers, told CNBC that investors had been expecting the market to decline and were looking for an excuse.

"The news gave us a reason to pull back, so we'll be watching how far it pulls back. So far we expect it to be just a pullback," Dorland said. 

However, famous investor Jim Rogers told CNBC at the weekend that the market could be setting itself up for a correction of between 15 percent and 20 percent.

Earnings outside were financials were helping the market's mood a bit.

Eli Lilly beat expectations with earnings of $1.13 a share even though the pharmaceutical giant warned that the new health care law would cut into revenue. Shares gained 0.5 percent in premarket trading.

Halliburton reported a 46 percent drop in earnings due to charges in Venezuela and weak demand across Latin America. Shares in the energy exploration firm fell 1.2 percent premarket.

Also on the earnings front, IBM Hasbro, M&T Bank and Zions Bancorp are due to report earnings Monday. Goldman Sachs will release its earnings Tuesday.

Earnings Season Continues

On the economic front, the Conference Board issues the Index of Leading Economic Indicators at 10 am New York time, with economists expecting a 1.1 percent increase for March following a 0.1 percent rise in February.

Toyota will officially agree to pay a record $16.4 million fine, stemming from its massive accelerator pedal recall. The settlement is expected to be signed Monday in Washington.

Also in the airline sector, talks between United parent UAL and Continental continue, with reports saying the talks could result in a merger or a marketing alliance. United is also in the midst of talking about a possible merger with U.S. Airways.

Airline Leaders

Senate Banking Committee Chairman Christopher Dodd will hold a news conference at 10:30 am, giving an update on the progress of the financial reform bill.