NEW YORK (AP) — Stocks are trading lower on Wall Street ahead of the beginning U.S. corporate earnings season and as more signs of instability emerge in Europe.
The Dow Jones industrial average was headed for its third straight losing day.
Alcoa, one of the 30 stocks in the Dow, becomes the first major U.S. company to report second-quarter results after the market close Monday. Even before the results came out, investors were going negative on the stock, sending it down 7 cents to $8.65.
Alcoa's results are often seen as a harbinger of how other major U.S. companies will fare, and so far investors' expectations are low. Wall Street analysts are forecasting a 1% decline in second-quarter earnings of S&P 500 companies, according to Standard & Poor's Capital IQ.
Kim Caughey-Forrest, senior equity analyst at Fort Pitt Capital Group, says many portfolio managers are afraid that this earnings season could bring bad surprises about stocks they've picked up recently.
"It's report card time," Caughey-Forrest said.
If earnings decline at S&P 500 companies overall in the second quarter, it would be the first drop after an unbroken string of growth since the third quarter of 2009, according to Sam Stovall, chief equity strategist at S&P Capital IQ. Of the 103 companies that have provided earnings guidance in the past month, 63 were negative, Stovall told clients in a research note.
Meanwhile, a pair of large acquisitions were announced Monday. Health insurer WellPoint is buying managed care provider Amerigroup for about $4.46 billion in cash. And Campbell Soup is buying the carrot and juice maker Bolthouse Farms for $1.55 billion in cash.
Investors were also spooked by news from Europe, where Spain's borrowing costs were rising dangerously high, just as finance ministers from the Euro zone countries gathered in Brussels to finalize the details of a rescue package for Spain's banks.
The interest rate on Spain's 10-year government bond rose to 7% Monday. Greece, Ireland and Portugal all asked for help from their international lenders when their own borrowing costs rose that high.
In Greece, a new three-party coalition government won a vote of confidence in parliament early Monday, ending a period of uncertainty that led to two elections in less than two months. Greece is in its fifth year of recession and has survived for two years on international rescue loans.
Spain is in better shape financially, and can afford the high rates for a few weeks at least. However, a long-term solution is badly needed to prevent the nation, which has an unemployment rate near 25%, from defaulting.
All eyes in Europe on Monday were on an EU financial ministers meeting in Brussels later that day and Tuesday which is hoped to make significant progress on a bailout loan for Spain's teetering banks.
The 17 countries that use the euro have committed to support a loan for the banks of up to €100 billion ($124 billion), but the precise amount needed may not be known until September.
Overseas markets had a poor start to the week after a disappointing U.S. jobs report on Friday dimmed the outlook for the world's largest economy and increasing borrowing costs in Spain and Italy cast a cloud over Europe's financial condition.
Britain's FTSE 100 shed 0.6% in Monday afternoon trading to 5,627.33. France's CAC-40 dropped 0.4% at 3,156.8 while Germany's DAX was down 0.4% at 6,387.57.