Reuters: Financial Services and Real Estate: US STOCKS-S&P 500 faces key test, Wall St set to slide

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US STOCKS-S&P 500 faces key test, Wall St set to slide May 14th 2012, 12:32 Mon May 14, 2012 8:32am EDT * Global markets lower on Greece, China growth worries * Economically sensitive stocks weak premarket * Avon shares up, considers merger offer * S&P 500 faces test of support at 1,340 * Futures down: Dow 80 pts, S&P 9.8 pts, Nasdaq 20 pts By Edward Krudy NEW YORK, May 14 (Reuters) - U.S. stocks were set to fall on Monday, tracking global equity markets lower as a political impasse in Greece heightened concerns about Europe's debt crisis and fears mounted about an economic slowdown in China. The general move out of risky assets, such as equities and commodities, was likely to see the S&P 500 retest an important support level at 1,340 which, if broken, could result in a steeper pullback for the index. Greece's president met little enthusiasm from political leaders on Monday to avert new elections, reinforcing fears the country was on the path to bankruptcy and an exit from the euro zone. The consequences of such an event are unknown. Investors fear it could prompt wider instability in Spain and Italy. "The growing possibility of Greece saying bye bye has put the entire region into the realm of the unknown in terms of the economic ripple effects," said Peter Boockvar, equity strategist and portfolio manager at Miller Tabak in a note. "Spanish and Italian bond yields are spiking and the cost of insuring against a Spanish default is now more expensive than for Hungary." Early indications suggested that stocks in economically sensitive sectors such as banks and those linked to natural resources would lead the decline. Morgan Stanley fell 1.1 percent to $14.77 in premarket trade. Aluminum producer Alcoa fell 1 percent to $8.97. Concerns about a slowdown in China have been troubling investors for several months. The decision of the world's second-largest economy on Saturday to cut the amount of cash banks must hold as reserves, normally seen as a pro-growth move, suggested the country may be facing more significant headwinds. S&P 500 futures fell 9.8 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 80 points, and Nasdaq 100 futures lost 20 points. "The world markets are all sharply lower on mounting fears over euro land, Europe's potentially steepening recession and worries over a global slowdown," said Peter Cardillo, chief market economist at Rockwell Global Capital. "It's all about fear and whether or not the market may hold major support." The pan-European FTSEurofirst 300 index fell to a four-month low, losing as much as 2.1 percent to an intraday low of 1,001.47 points - just off a 2012 low of 1,001.30 points reached on Jan. 2. Three top executives involved with a failed hedging strategy that cost JPMorgan Chase & Co at least $2 billion and tarnished its reputation are expected to leave the bank this week, sources close to the matter said on Sunday. The shares were volatile premarket, last trading down 0.1 percent to $36.94 after losing 9 percent on Friday. In merger news, Avon Products Inc on Sunday said it told Coty Inc that it would consider the smaller company's $10.7 billion takeover bid and it expected to respond within a week. The shares were trading up 4.5 percent at $21.10 in premarket. Concho Resources Inc said it would buy all of the oil and natural gas assets of Three Rivers Operating Company LLC, a portfolio company of private equity firm Riverstone Holdings LLC, for $1 billion in cash. Yahoo Inc is replacing its CEO for the third time in as many years, and giving three board seats to a hedge fund led by Daniel Loeb, putting him in a strong position to influence strategy at the struggling Internet company. The stock rose 2.2 percent to $15.53. AMR Corp, parent of American Airlines, bowed to pressure on Friday from its unsecured creditors, including its largest labor unions, and said it would explore merger options while it is still in bankruptcy. Link this Share this Digg this Email Reprints

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