Stock index futures slumped on Monday with no deal in sight on raising the U.S. debt ceiling and investors still fretting over ongoing fiscal problems in Europe.
An expected strong earnings season could lift equities this week, though encouraging results last week from Google Inc
With five days remaining before U.S. President Barack Obama's deadline for a deal to raise the government's debt ceiling, Republicans and Democrats were still divided on a plan to cut the nation's deficit and raise the debt limit in time to avoid an unprecedented default. That outcome was seen as unlikely, though.
There's a perfect storm happening on a global macroeconomic basis with no debt deal here and the ongoing issues in Europe, and the market is looking at all these things and is fairly anxious, said Oliver Pursche, president of Gary Goldberg Financial Services in Suffern, New York.
S&P 500 futures fell 8.6 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures sank 77 points, and Nasdaq 100 futures lost 21.25 points.
European equities added to last week's losses early Monday, led lower by banks. Results from the region's regulatory stress tests late Friday failed to dispel concerns over the potential impact from the region's sovereign debt crisis.
The FTSEurofirst 300 <.FTEU3> index of top shares fell 1.2 percent, while the Stoxx Europe 600 banking index <.SX7P> lost 2.2 percent. U.S.-listed shares of Barclays Plc
Toymaker Hasbro Inc
International Business Machines Corp
For people like myself, who are fairly optimistic about the economic outlook, we're looking for earnings to validate our optimism, Pursche said. However, because of the macro issues, we may not see a big lift on them. They may just set us up for gains in the second half of the year.
The Nasdaq closed up 1 percent on Friday, helped by Google's blowout quarter, while the Dow and S&P posted modest gains. The advances were a bright spot in a stretch dominated by selling, driven by concerns over the U.S. and European fiscal issues.
(Reporting by Ryan Vlastelica; editing by Jeffrey Benkoe)