By Saumya Vaishampayan
U.S. stock futures fell Monday, after the S&P 500 and Nasdaq
posted their biggest weekly gains in more than a year.
Dow Jones Industrial Average futures fell 53 points, or 0.3%, to
16683. S&P 500 futures lost eight points, or 0.4%, to 1952, and
Nasdaq-100 futures fell by nine points, or 0.2%, to 4026. Changes
in stock futures don't always accurately predict stock moves after
the opening bell.
Shares of American Express Co. and Nike Inc. fell the most on
the Dow in premarket trade, down 1.1% and 0.9%, respectively.
Strong earnings reports from companies like Microsoft helped
boost stocks last week. The S&P 500 jumped 4.1% for the week,
marking its largest weekly percentage gain since January 2013. The
Nasdaq Composite increased 5.3%, the biggest weekly percentage gain
since December 2011.
Earnings season has drawn investors' attention back to the U.S.,
where the economy continues to show signs of improvement. As of
Friday, when 208 companies of the S&P 500 had reported results,
the index was on track for 5.6% earnings growth from a year
earlier, according to FactSet. That is higher than the 4.5%
earnings growth expected before the reporting season began.
Continued earnings growth and positive economic data should lift
stocks, said Jonathan Golub, chief U.S. market strategist at RBC
Capital Markets.
Mr. Golub said this is the 10th quarter in a row that
domestically oriented companies in the S&P 500 are doing better
than those that are internationally focused. "It highlights the
fact that the U.S. economy is in pretty good shape," he said.
In Europe, the results of the European Central Bank's stress
tests showed that all but 13 of the region's leading banks have
enough capital to survive another period of economic turbulence.
The stress tests are part of an effort to reassure investors that
European lenders are back on track.
Italian banks were a weak spot. Four Italian banks were told
they need to raise more capital, weighing on that country's stocks.
The Stoxx Europe 600 fell 0.2%.
Meanwhile, Brazil's elections concluded Sunday, with President
Dilma Rousseff winning a second term by a narrow margin.
Reports on the U.S. housing market and regional manufacturing
are scheduled for release. At 10 a.m. EDT, pending home sales are
expected to rise 1% in September, according to economists surveyed
by The Wall Street Journal. Later in the morning, a gauge of
Texas-area manufacturers is scheduled for release.
In commodity markets, crude-oil futures fell 0.6% to $80.50 a
barrel. Gold futures inched down 0.1% to $1230.80 an ounce.
The yield on the 10-year Treasury note fell to 2.271%. Yields
fall as prices rise.
In earnings news, Merck Co. reported earnings that beat
analysts' expectations, but revenue fell short. The pharmaceutical
giant tightened its earnings outlook for the year by three cents on
each end, now expecting $3.46 to $3.50 a share. It also cut the top
end of its revenue forecast and now expects $42.4 billion to $42.8
billion for the year. Shares rose 0.3% in premarket trade.
Valeant Pharmaceuticals International Inc. said it is prepared
to raise its offer for Allergan Inc. to at least $200 a share.
Allergan also reported third-quarter earnings that beat
expectations and raised its guidance for the year. Shares of
Allergan rose 1.2% in premarket trade.
Write to Saumya Vaishampayan at saumya.vaishampayan@wsj.com