Another sell-off looms

[notiCIas]

Another sell-off looms

Futures point to a rough start on Wall Street after last week's tumble, big drops overseas Monday.

April 18, 2005: 7:49 AM EDT


NEW YORK (CNN/Money) - Stocks looked set to tumble for a fourth straight session Monday as markets overseas fell sharply in reaction to last week's sell-off on Wall Street.

In just the last week, investors have grown worried about a slowing economy, whereas before that many were concerned about a possible pickup in inflation -- and the pace of Fed interest rate hikes.

S&P and Nasdaq futures pointed sharply lower early Monday, indicating a down start for stocks. That would continue the pattern of late last week: The major indexes all sank nearly 2 percent Friday, capping a three-session sell-off that took the Dow down about 400 points.

It was the worst week for the 30-share Dow in just over two years.

The selling spread worldwide Monday as stocks tumbled in Asia and were trading lower in Europe.

The selling came even as oil prices fell below $50 a barrel in early trading. Whereas cheaper oil would normally be seen as positive for stocks, investors are now viewing it as a sign of a coming economic slowdown, which could hurt demand for oil.

The May contract for light crude sank 71 cents to $49.78 a barrel in electronic trading, while the June contract for Brent crude fell 1.13 cents to $50.48.

Despite the negative momentum for stocks, still some analysts believed that last week's selling was overdone and that the busy earnings week this week has the potential to stop the recent slide.

"Other than a couple of marquee names like IBM (Research) and Apple (Research), earnings haven't been bad," said Art Hogan, chief market analyst at Jefferies & Co. "I think we'll start to focus on the carnage we did last week, and at some point today we'll put in a bottom."

Early Monday Dow component 3M (Research) reported slightly better than forecast earnings and said second quarter results should be at or above the consensus estimates from earnings tracker First Call. The diversified manufacturer also reiterated its full-year earnings guidance.

Bank of America (Research), the nation's No. 3 bank, also reported better than forecast earnings, and drugmaker Eli Lilly (Research) edged past analysts' forecasts by a penny. But toymaker Hasbro (Research) reported weaker than expected earning, and European electronics manufacturer Phillips also posted disappointing results.

The reports kick off one of the busiest weeks for earnings, with more than 400 companies expected to report results, including 12 of the 30 of the Dow components. (For a special report on earnings, click here.)

Treasury bond prices rallied further as investors sought the safety of government debt, cutting the yield on the 10-year note to 4.22 percent from 4.24 percent late Friday.

The dollar lost ground on the euro and the yen.

There are no major economic reports due Monday.

In corporate news, computer document company Adobe Systems (Research) agreed to buy multimedia software firm Macromedia (Research) in a $3.4 billion stock deal