US Markets

Stock futures decline as Japan slides into recession


U.S. stocks looked set to decline on Monday, with global shares hit by the news that Japan had unexpectedly slipped into recession.

Read MoreTrack US stock index futures

Data showed Japan's economy shrank in the third quarter by an annualized 1.6 percent, rather than the forecast 2.1 percent gain.

In the U.S., industrial production fell 0.1 percent in October, compared to expectations for a 0.2 percent gain.

Japan's benchmark Nikkei 225 index posted its biggest one-day drop since August on the news and settled near a one-week low. The dollar-yen pair hit a seven-year high of 117.04 before retreating to 115.7 later on Monday.

Traders on the floor of the New York Stock Exchange.
Brendan McDermid | Reuters

"Japan's renewed weakness comes at a time when the global economy is already facing several other headwinds, such as the threat of deflation (especially in the euro zone), together with the pressures being seen in several emerging markets, such as Russia, Brazil and also China," said Simon Smith, chief economist at FxPro, in a note out Monday.

In the corporate space, it was announced on Monday that Pfizer has struck an alliance with Germany's Merck to build cancer immunotherapy drugs. Pfizer will pay Merck $850 million upfront, with further payments of up to $2 billion.

Markets 'living on borrowed time': Wilbur Ross

Before trading starts, Actavis will likely announce a cash-and-stock deal to buy Allergan for more than $210 per share, people familiar with the situation told CNBC on Sunday.

Read MoreActavis nears rescue bid for Allergan: Sources

The rest of the major retailers will report third-quarter earnings this week, with 23 companies to post numbers. On Monday, will post numbers before Wall Street opens, followed by Urban Outfitters afterwards.

U.S. stocks finished flat on Friday, with the S&P 500 rising a fraction of a point to notch up another record.