By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) -- U.S. stock futures fell into the red on
Monday, as Dow industrials heavyweight IBM dropped sharply in
premarket trading on downbeat results.
European stocks fell after major software maker SAP cut its
earnings outlook.
Swinging from a thin lead to a loss, futures for the S&P 500
index (SPZ4) fell 5.6 points, or 0.3%, to 1,875140, while those for
the Dow Jones Industrial Average (DJZ4) slid 81 points, or 0.5%, to
16,353. Futures for the Nasdaq-100 index (NDZ4) was wavering
between losses and gains in premarket trading.
Stocks rallied on Friday, but Wall Street still closed out the
week with losses, with both the Dow industrials (DJI) and the
S&P 500 index (SPX) dropping 1%. The Nasdaq Composite Index
(RIXF) lost 0.4%.
IBM disappoints: IBM (IBM)'s earnings missed analysts'
expectations, and shares skidded more than 8% in premarket trading.
IBM is the second-biggest component in the Dow industrials.
Craig Erlam, market analyst at Alpari, said stock futures seemed
to be containing downward pressure from European stocks until IBM
hit. "A strong earnings season is going to be so important if we're
going to see an end to the panic selling that we've seen over the
last week. IBM have got things off to a nightmare start which may
hurt stocks today so now it's down to Apple later to give investors
a lift," he said in an email.
IBM also said it will sell its global semiconductor technology
business to Globalfoundries, paying $1.5 billion in cash to the
company over the next three years and will reflect a precash tax
charge of $4.7 billion in its third-quarter results.
IBM's faltering stock also may deliver a $1-billion hit to
prominent investor Warren Buffett's Berkshire Hathaway (BRK/A),
which is the largest shareholder in the tech giant, with more than
70 million shares, according to FactSet.
Economic calendar: Dallas Federal Reserve President Richard
Fisher will be interviewed on CNBC at 8 a.m. Eastern on Monday, and
Fed Governor Jerome Powell will give a speech on community banking
to a St. Louis Fed webinar at 10 a.m. Eastern Time.
More earnings: Shares of Hasbro Inc.(HAS) gave up an earlier
lead from results as the market turned south. rose 1% after its
results. VF Corp. (VFC) is also due ahead of the bell. More than
1/3 of Dow stocks to report this week
After the close, Apple Inc. (AAPL) and Chipotle Mexican Grill
Inc. (CMG) will report results. Apple is projected to post fiscal
fourth-quarter earnings of $1.31 a share on sales of $40 billion,
according to a consensus survey by FactSet. What to watch for in
Apple's results Plus: More earnings expectations for Monday
Apple also starts rolling out its Apple Pay system on Monday,
though The Wall Street Journal points out the biggest gap is
department-store cards.
Other markets: German stocks led fresh weakness in Europe, with
the Stoxx Europe 600 index sinking nearly 1% after business
software maker SAP SE (SAP) lowered its earnings outlook for the
year. U.S.-listed shares were down 4% in premarket trade. (Read
more about Europe's big stock movers here:
http://www.marketwatch.com/story/sap-slides-nutreco-surges-europes-big-stock-movers-2014-10-20.)
In Asia, the Nikkei 225 index had a spectacular rebound, surging
nearly 4%, which weakened the yen (USDJPY) and drove investors into
the dollar. Gold(GCZ4) was flat, while oil prices(CLX4) inched
higher.
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