US futures head lower on danger signs from Europe

Associated Press
FILE-In this Friday, June. 29,  2012, file photo, specialist James A. Denaro works the trading floor of the New York Stock Exchange before the closing bell.  Stock futures are falling on the eve of the U.S. earnings season  Monday, July 9, 2012,with more signs of instability coming out of Europe. (AP Photo/David Karp, file)
FILE-In this Friday, June. 29, 2012, file photo, specialist James A. Denaro works the trading floor of the New York Stock Exchange before the closing bell. Stock futures are falling on the eve of the U.S. earnings season Monday, July 9, 2012,with more signs of instability coming out of Europe. (AP Photo/David Karp, file)

NEW YORK (AP) — Stock futures fell Monday hours ahead of the start of U.S. earnings season with more signs of instability coming out of Europe.

Dow Jones industrial average futures slid 40 points to 12,687. Standard & Poor's 500 futures fell 4.5 points to 1,347.10 and Nasdaq futures gave up 2 points to hit 2,607.

The need for European financial leaders, who are gathering in Brussels, to hash out a bailout plan for Spain grew more urgent as borrowing costs for the country hit extraordinarily dangerous levels.

The interest rate, or yield, on the Spain's 10-year bonds rose to 7 percent Monday, a level at which Greece, Ireland and Portugal sought international bailouts.

Greece is still trying to right itself after electing leadership that vowed to stick with repayments to international lenders.

The nation's deputy labor minister resigned from the new coalition government Monday, saying it should have pressed harder to renegotiate the terms of the country's bailout agreements.

Greece is in its fifth year of recession and has survived as a nation 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 very much needed to prevent the nation, which has an unemployment rate near 25 percent, from defaulting.

A pair of large acquisitions were announced Monday as corporations prepared to release second-quarter earnings reports.

Health insurer WellPoint Inc. is buying managed care provider Amerigroup Corp. for about $4.46 billion in cash. And Campbell Soup Co. is buying the carrot and juice maker Bolthouse Farms for $1.55 billion in cash.

After trading closes Monday, Alcoa Inc. kicks of the U.S. earnings season with its second-quarter results.

Many are expecting corporate profits, which have defied the weight of the debt crisis in Europe and the slower economy, to finally succumb to those forces.

Stock analysts expect earnings for companies in the Standard & Poor's 500 index to decline 1 percent for April through June compared with the year before, according to S&P Capital IQ, the research arm of S&P.