Stocks were set to hit fresh 12-year lows at Monday's open as a lack of confidence in steps to shore up ailing banks persisted, offsetting Merck's
Unease about the fate of major banks had stock markets sliding about 2 percent in Europe, extending a sell-off seen in Asia overnight.
Before the bell, shares of JPMorgan
The Financial Select Spider ETF
What's dragging global markets across the board, it's financials. We're concerned about HSBC, Lloyds is getting hit, and AIG came out and warned its failure will cripple world banks, said Art Hogan, chief market analyst at Jefferies & Co in Boston. If you look at everything that's been done so far, there's been a lack of detail.
S&P 500 futures fell 10.30 points and were below fair value, a formula to evaluate pricing taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures slid 121 points, and Nasdaq 100 futures shed 14.50 points.
Merck, a Dow component, said on Monday it would buy Schering-Plough for $41.1 billion, uniting the makers of cholesterol drugs Zetia and Vytorin, in the second mega-deal for the pharmacy sector in weeks.
But optimism about the deal was overshadowed by worries about the fate of the world's banking system. In Britain, Lloyds Banking Group
American International Group Inc
In an interview on CNBC television, billionaire investor Warren Buffett said the current environment was an economic Pearl Harbor but added that over 10 years investors will do better owning a group of equities.
Merck shares slipped 10.3 percent to $20.40 before the bell, but shares of Schering-Plough Corp jumped 12 percent to $19.75.
(Editing by James Dalgleish)