Stocks opened moderately lower Monday as investors prepared for earnings season to begin in earnest and awaited economic data that will provide more details on the struggling economy.
The market was also uneasy about a New York Times report saying the Treasury has directed General Motors to lay the groundwork for a potential bankruptcy filing by June 1. GM might be forced to file for bankruptcy if it cannot complete a plan to exchange debt for equity and receiving concessions from the United Auto Workers, according to the report.
A White House official, speaking on condition of anonymity because no specifics of the GM plan have been announced, told the Associated Press that any speculation about a GM bankruptcy filing is "premature."
Jamie Cox, managing partner at Harris Financial Group, said the potential economic fallout from a GM bankruptcy filing will likely weigh on the market.
"Think of the economic fallout potential," Cox said. "It's inconceivable (GM) gets in to bankruptcy" and gets out quickly, he added.
Investors are also looking ahead to a spate of earnings results throughout the week, including reports from key financial firms such as Goldman Sachs Group, JPMorgan Chase and Citigroup. Financial companies had been among the hardest hit by the economic downturn and credit crisis, but they have also helped lead a rally over the past five weeks. Goldman's earnings report is due out Tuesday; JPMorgan's on Thursday; and Citigroup's on Friday.
Last Thursday, a surprise announcement by Wells Fargo that it will report a record quarterly profit for the first quarter helped send the market sharply higher ahead of a three-day holiday weekend.
Along with earnings reports, investors will receive key economic reports on inflation, housing and manufacturing throughout the week.
Cox said that with no major earnings or economic reports due out Monday, it could be a light trading day as investors await more information as the week progresses.
The Dow has rallied five straight weeks, but last week showed increased volatility as investors prepare for earnings reports. The Dow lost 2.8% over Monday and Tuesday as investors became worried about potentially weak earnings reports. But after the Wells Fargo report Thursday, the Dow surged and ended up 0.8% for the week.
Aside from major financial firms reporting this week, investors will also get earnings results from key companies in other sectors, such as Intel, Johnson & Johnson and General Electric.
In corporate news, prescription benefits manager Express Scripts said it will buy the pharmaceutical benefit management subsidiaries of health insurer WellPoint for $4.68 billion. Shares of both companies rose.
Meanwhile, bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.91% from 2.92% late Thursday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.18% from 0.17% late Thursday.
The dollar mostly declined against other major currencies, while gold prices rose.
Overseas, Japan's Nikkei stock average fell 0.4%. Major European markets were closed Monday for Easter.