IBM stumble puts markets in negative mood

U.S. stock index futures turned negative ahead of the open on Wall Street on Monday as IBM posted earnings that badly missed estimates, raising concerns that last week's volatility would continue.

Big Blue reported earnings excluding items of $3.68 a share, well below the $4.31 a share that had been expected, The stock, a Dow component, tumbled more than 7 percent in pre-market trading, following European tech giant SAP, which soured sentiment in European markets with its own disappointing earnings news.

"It's not the entirety of technology. It's not the entirety of the whole market, but a down 8 percent IBM is going to take the market down," said Art Hogan, chief market strategist at Wunderlich Securities. "It had started out a splendid Monday morning."

On Friday, data showed that consumer sentiment in early October rose to a seven-year high. Last week, market volatility left the S&P 500 index nursing its longest weekly losing streak since 2011, however.

Read MoreIBM earnings miss the mark

This week, markets will face a raft of earnings from about 20 percent of the S&P500, including tech companies, like Apple and Microsoft. Big Dow stocks Boeing, McDonald's, Coca-Cola and Caterpillar join a parade of consumer companies, automakers and industrials.

On Monday, investors will be watching for earnings from Apple, SAP, IBM, Texas Instruments, Chipotle, VFCorp, Hasbro, Gannett, Peabody Energy, Halliburton, Celanese and Hexcel. There are no major data releases today.

IBM's third quarter earnings will be of particular interest after news that the company has agreed to hive off its loss-making semiconductor unit to contract-chipmaker Globalfoundries.

In Europe, shares were trading slightly lower on Monday with investors reacting to corporate earnings and acquisition deals rather than the positive trend set in Asian markets where a broad-based rally tracked the strong U.S.lead set on Friday.

SAP cuts profit outlook as customers switch to cloud

"IBM is a company in transition," said Hogan. "Unfortunately, we were heading in a positive direction until that hit, and we're going to extrapolate that things are bad for everybody, and they're not."

Read MoreWhat could rock the markets in the week ahead