Stocks are beginning the week lower after hitting long-term highs on Friday and as risks surface in Europe.
S&P 500 futures are down by about one-third of a percentage point, with the losses accelerating in the last hour. Traders are taking their cues from Europe, where German and French indexes have fallen more than half a percentage point.
The big headlines come from Spain, where Prime Minister Mariano Rajoy and other People's Party members have been accused of accepting improper payments from a government fund. A poll also shows weakening popular support for his leadership. Spanish bond yields are climbing as a result, while the country's stocks are down by almost 2 percent. Italy is under pressure, as well.
Stocks had been advancing strongly for the last 2-1/2 months as perceived event risk waned and money returned from the bond market. Volatility has also dried up as the S&P 500 climbed to its highest level since late 2007, while the Russell 2000 small-cap index and the Dow Jones Transportation Average reached all-time highs. The question today is how much damage will be done by the Spanish headlines and simple profit-taking.
Last week was also full of important data that showed steady improvement in the global economy and positive corporate earnings. The schedule for the next five days is much quieter, with the Institute for Supply Management's non-manufacturing index tomorrow and initial jobless claims on Thursday as the main events. December factory orders, today's only release, are unlikely to affect sentiment.
Currencies and commodities are painting a mostly negative picture. The euro is down against the dollar and the Japanese yen, while oil is lower by about 1 percent. Copper and gold are down by half a percentage point, while silver fell by about 1.5 percent. Most agricultural
foodstuffs are modestly higher.
In company-specific news, Herbalife is down 13 percent after the New York Post uncovered a Federal Trade Commission released 192 complaints against the firm over the last seven years. That follows embittered debate over the company's accounting practices.
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