Wall Street looked set for a drop of more than 1 percent at the open on Monday as investors worried that a possible global flu outbreak could throw a wrench into the economy's ability to climb out of a recession.

Governments around the world moved to contain the spread of a possible swine flu outbreak, as a virus that has killed over 100 people in Mexico spread to the United States and Canada and may have reached as far as New Zealand.

Right now it's putting a dent in the market and will continue to serve as a fear factor, said Andre Bakhos, president of Princeton Financial Group in Princeton, New Jersey.

Until some visibility arrives on where this is going and a greater study of the implications, it will weigh on the market.

In the auto industry, General Motors Corp unveiled new restructuring plans, including the elimination of the Pontiac brand to focus on four core brands.

GM, trying to secure the government funding it needs to stay in business, was expected to announce a fresh round of cost cutting on Monday.

In earnings reports Monday morning, Verizon Communications Inc , the No. 2 U.S. phone company, reported higher-than-expected quarterly profit after a 12 percent revenue increase, helped by its purchase of a smaller rival and growth in cell-phone customers. Verizon's shares added 1 percent to $31.30 in premarket trading.

S&P 500 futures fell 17.10 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 lost 146 points, and Nasdaq 100 futures slid 21.75 points.

Jitters over what a government stress test of 19 major financial institutions might reveal could add to volatility. The Obama administration is due to release the results on May 4 but some of the details are expected to start trickling out before that.

Shares of Wells Fargo & Co fell 4.7 percent to $20.39 after influential analyst Richard Bove downgraded the bank to hold from buy.

As GM pushed ahead with its restructuring plans, rival Chrysler LLC showed signs of progress with its unionized workers with just days left to complete deals to slash labor and debt costs or face bankruptcy.

Elsewhere on the earnings front, cell-phone chip supplier Qualcomm Inc swung to a loss, hurt by investment losses and costs related to its legal settlement with Broadcom Corp . Qualcomm's shares rose 3.4 percent to $42.75.

Stocks rallied Friday as earnings showed companies have weathered the recession, and economic data raised hopes the economic cycle may have hit a bottom.

On Sunday U.S. President Barack Obama's economic adviser, Lawrence Summers, said the sense of unremitting freefall in the U.S. economy has ended and the picture is now mixed.

The broad S&P 500 is up about 28 percent from March's bear market low in a rally spurred by growing optimism over the health of banks and signs the economic slowdown may be waning.

Data on tap includes a reading from the Dallas Fed's Texas manufacturing index for April at 10:30 a.m. EDT and the Chicago Fed's Midwest manufacturing index for March at 12:00 p.m. EDT.

(Reporting by Leah Schnurr; editing by Jeffrey Benkoe)