Stock index futures pointed to a lower open on Monday as investors remained concerned about Europe's fiscal issues and financial sector, though some merger and acquisition news helped limit losses.
Traders also were cautious following the market's the best week for the S&P this year, and were looking ahead to the unofficial start of earnings season, which Alcoa Inc will kick off after the market closes.
Worries persisted ahead of the stress tests of Europe's banks. Over the weekend, a German magazine reported that the test included a haircut on German sovereign debt under certain conditions in its worst scenario.
There's a chance the banks won't hold up too well under these tests, said Dan McMahon, senior managing director of equity trading at Raymond James Financial Inc in New York. We don't know how likely that is, but there's a fair amount of pessimism.
On the upside, Aon Corp agreed to buy Hewitt Associates Inc for $4.9 billion in cash and stock. The offer of $50 a share is 41 percent more than the closing price on Friday, which sent the company's stock up 31 percent to $46.45 before the bell.
Separately, Playboy Enterprises Inc advanced 35 percent to $5.33 after Hugh Hefner proposed a deal to take the company private. Hefner offered to buy all shares he does not currently own for $5.50 in cash.
The (merger) news is a positive as we start the earnings season, said Hugh Johnson, chief investment officer at Hugh Johnson Advisors in Albany, New York. It's very positive when you see new money flowing into the market.
S&P 500 futures fell 2.7 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 fell 22 points, and Nasdaq 100 futures lost 2.5 points.
While analysts have been cutting their estimates on Alcoa, citing falling aluminum prices, the first Dow component to report is still expected to swing to a profit in its second quarter. The stock gained 1.5 percent to $11.10 in premarket trading.
For the second quarter, analysts see earnings growth of 27 percent for companies in the S&P 500, according to Thomson Reuters data, up from previous readings in the past three quarters, which hovered around 22 percent. This would also be higher than the 22.4 percent analysts were predicting at the beginning of the year.
On Saturday, Dow component Johnson & Johnson , which was recently forced to recall children's Tylenol and other over-the-counter pediatric medicines, was sued in a federal court in Chicago by consumers unhappy with the company's plan to offer coupons or replacement products to those who bought the affected drugs.
U.S.-listed shares of BP Plc rose 3.2 percent to $35.15 in premarket trading a day after sources said the company was in talks with Apache Corp and other companies over potential asset sales.
Chinese data over the weekend showing the country's copper demand dropped sent Freeport McMoRan Copper & Gold Inc down 1.2 percent to $65.22 before the bell.
Japan's Nikkei average <.N225> inched lower on Monday while European stocks dipped in morning trade following stellar gains last week ahead of the start of the earnings season.
Wall Street closed out its best week in a year on Friday, snapping back from a long stretch of selling as investors looked ahead to what many expect will be a solid earnings season.
(Additional reporting by Matthew Lynley)