After quite a positive week, U.S. stocks indicated a lower opening Monday morning as investors heard of trouble from the biggest U.K. lender to landlords, as well as awaited data on U.S. manufacturing, anticipating a contraction.U.S. stocks finished with gains last week as oil prices dropped from highs of over $135 a barrel. On Friday, too, stocks were mostly higher with the exception of the Dow industrial, which dropped nearly 8 points, or 0.06%. The S&P 500 and the Nasdaq composite finished 2 points, or 0.15%, and 14 points, or 0.57%, higher respectively.
This morning, two indicators are due for release, but investors will keep their eye mostly on one.
April construction spending will be reported at 10:00 a.m. EDT, and will likely show further decline in spending.
At the same time, the Institute for Supply Management will issue its monthly report for May. Wall Street gives much weight to the results of this indicator, which shows manufacturing activity and is thus a better gauge for economic activity than many other indicators. Already the index is below 50, and this month is expected to decline slightly more.
Making the headline news this morning is British biggest lender to landlords, Bradford & Bingley Plc, which suffered its biggest drop in London trading after the company announced plans to sell shares at a 33% discount and said the housing market is worsening. The company had a pretax loss of 8 million pounds.
Meanwhile, oil dropped below $127 a barrel Monday on worries that soaring prices have eaten away at demand in the U.S. and other nations, and a U.S. probe into futures trading continued to weigh on the market.
In deal news, Mobile service provider China Unicom Ltd. is acquiring fixed-line China Netcom Group Corp. in a share swap valued at $56.3 billion, based on Unicom's stock last traded price.
In other corporate news, ImClone (NASDAQ: IMCL) shares are down 2.5% in premarket trading, while Genentech (NYSE: DNA)'s are up 2.3%. Erbitux, ImClone's drug, was found to extend life by five weeks for lung cancer patients in a study that may help its partners win regulatory approval for the new use. The results could make Erbitux the preferred therapy for half of non-small-cell lung cancer patients who can't take Genentech's Avastin because of side effects. Meanwhile, second phase 3 study of Avastin plus chemotherapy showed improved progression-free survival in women with advanced HER2-negative breast cancer
Toyota Motor (NYSE: TM) may cut its U.S. sales forecast due to disappointing truck sales, the Financial Times reported.
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