Wall Street points lower on Europe worries, Herbalife, Dell in focus
As the U.S. earnings season winds down, stock futures fell Monday morning after hitting five-year highs in the previous session, as traders turned their attention back to Europe, while awaiting factory data at home.
After a data-heavy past week, investors will be getting a relatively light economic calendar in comparison this week, starting with December factory orders at 10:00am ET. Economists expect a 2.3% rise, compared to a flat reading the prior month.
Until this data rolls in, Spain was taking centre stage as the country's bond yields began to rise moderately as Prime Minister Mariano Rajoy tried to contain a corruption scandal. He denied over the weekend allegations that he, together with members of his political party, had accepted secret payments.
Traders also began to consider Italy's general election later this month, with concerns the next government would mess with the economic measures set by Mario Monti.
Futures on the three main market indices were down between 0.5% and 0.7% this morning.
On Friday, the Dow finished above the 14,000 level for the first time since 2007, on the back of jobs data. The primary driver of the gains was said not to be the 157,000 jobs created in January - which came in under expectations - but the upward revisions in the prior two months, as well as other economic data that showed signs of recovery overseas and at home.
On the corporate front, earnings season in the U.S. began to wind down, with around half of the firms in the S&P 500 having reported so far. Another 90 S&P 500 firms will report this week, according to Deutsche Bank, accounting for 12% of the index’s market capitalization.
According to data by FactSet, around 70% of the companies that handed in their numbers so far have topped Street expectations.
In other corporate news, Dell (NASDAQ:DELL) shares rose on Friday after Reuters reported that it was close to signing a potential buyout deal, with an announcement expected to come as early as today. The Wall Street Journal reported that investors would be offered a price of around $13 to $14 a share. Shares of the company edged up premarket after rising almost 3% on Friday, but its stock is up nearly 50% in the last three months.
Elsewhere, according to the New York Post, Herbalife (NYSE:HLF) is now under investigation by the Federal Trade Commission, after the company was accused of running a pyramid scheme by Pershing Square hedge fund manager Bill Ackman. The report said the FTC has received 192 complaints against the firm in the last seven years. Shares of the company dropped more than 10% before the opening bell.
In electronic trade on the New York Mercantile Exchange, March crude fell 99 cents to $96.78 a barrel, while gold futures shed $6.00 to $1,664.60 an ounce.
European markets were down in early afternoon trade on Monday, with France's CAC 40 off the most, by nearly 1%. The FTSE 100 was down 0.9% and Germany's DAX fell by 0.88%.