By Sara Sjolin, MarketWatch Merck & Co. to buy Cubist
Pharma
LONDON (MarketWatch) -- U.S. stock futures pointed to a lower
start to the week on Monday, as investors assessed new, downbeat
hints on the world economy and speculated how soon the Federal
Reserve could start to hike interest rates.
Futures for the Dow Jones Industrial Average (DJZ4) dropped 54
points, or 0.3%, to 17,899, while those for the S&P 500 index
(SPZ4) lost 7.10 points, or 0.3%, to 2,069.00. Futures for Nasdaq
100 index (NDZ4) fell 14.25 points, or 0.3%, to 4,299.
The Dow average flirted with the 18,000 level on Friday, but
with futures heading south on Monday the benchmark looked set to
remain below the milestone. The S&P and Nasdaq also climbed on
Friday following much better-than-expected nonfarm-payrolls numbers
for November.
While the jobs data is good news for the U.S. labor market, it
also raises speculation when the Fed will introduce its first
tightening to its ultra-loose monetary policy. Nour Al-Hammoury,
chief market strategist at ADS Securities, said in a note on Monday
that rate-hike guesswork is likely to drive the markets this week
and that the solid nonfarm report made traders believe a hike in
2015 is more likely.
"However, the factory orders [out on Friday] eased these
speculations, as it posted the third monthly decline in a row,
which has not been seen since 2012," he said. "Back then, when the
factory orders fell for four consecutive months the Fed reacted by
introducing QE3. Not all the economic figures are bad, but at the
same time the Fed now has no option of QE to fall back on."
Data: After a busy run of high-profile data last week, Monday is
a bit of a breather. Only the labor-market conditions index from
the Fed is due at around 10 a.m. Eastern Time and instead investors
have retail sales and consumer sentiment to look forward to on
Thursday and Friday, respectively.
Fed speakers: Atlanta Fed President Dennis Lockhart will speak
on the economic outlook and monetary policy to the Council for
Quality Growth in Atlanta at 12:30 p.m. Eastern Time. Lockhart will
be a voting member of the Fed policy committee in 2015.
Global growth worries: Concerns about the health of the global
economy resurfaced on Monday after disappointing Chinese trade
numbers and data showing Japan's economy contracted more than
initially forecast in the third quarter.
Movers and shakers: Cubist Pharmaceuticals Inc. (CBST) soared
35% ahead of the bell after drug giant Merck & Co. Inc. (MRK)
agreed to buy the smaller antibiotics maker for $8.4 billion. Merck
inched 0.2% higher premarket.
Other markets: Asian markets got their first chance to react to
the solid U.S. nonfarm-payrolls numbers, sending indexes in Japan
and China higher. China's Shanghai Composite closed above 3,000 for
the first time since 2011.
In Europe, the euro (EURUSD) traded around a 28-month low after
Ewald Nowotny, member of the European Central Bank's Governing
Council, said the currency union is the weak spot in the world
economy. European stock markets were also mostly lower.
Crude oil (CLF5) continued to slide, while metals were mostly on
the rise. The dollar (DXY) rose against most major currencies.
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