Europe Anxiety Drives Down Futures, Wal-Mart Slides

(REUTERS) -- Stock index futures slid on Monday on renewed anxiety over how Europe would tackle its sovereign debt crisis while Wal-Mart shares fell after a report about a stymied probe into bribery allegations.

The Netherlands government failed to agree on budget cuts over the weekend, making elections in the core euro zone member almost unavoidable and cast doubt on the country's support for future euro zone measures.

German manufacturing shrank at its fastest pace in nearly three years in April, denting hopes it can drive growth in the euro zone.

The first round of the French presidential elections added to the uncertainty after anti-immigration crusader Marine Le Pen scored a record first-round score, jolting the race between Socialist front-runner Francois Hollande and incumbent Nicolas Sarkozy.

Europe's debt crisis has been a major headwind for U.S. equities as investors worried it may affect growth and corporate profits. While the S&P snapped a two-week string of losses last week, it remains down 2.9 percent from a closing high in early April.

The real problem is the deterioration in the political backdrop in Europe, said Jack de Dan, chief investment officer at Harbor Advisory Corp. in Portsmouth, New Hampshire.

If we can't deal with the budget problems here and in Europe, everything is going to resolve to the negative and the financial markets will show it, we'll lose all this advance we got in the first quarter and more.

Wal-Mart Stores Inc. dropped 4 percent to $59.93 in premarket trading after the New York Times reported officials at the retailer stymied an internal investigation into allegations of extensive bribery at its Mexican subsidiary.

S&P 500 futures fell 14.6 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures lost 135 points, and Nasdaq 100 futures sank 24.5 points.

Kellogg Co. fell 5.6 percent to $50.99 premarket after the cereal maker cut its full-year profit view.

Xerox Corp. rose 2.9 percent to $8.10 after reporting its results, while ConocoPhillips was off 1 percent at $72.16.

Shares of D.R. Horton Inc. rose 0.8 percent to $15.50 premarket after the homebuilder reported a jump in new orders for the third straight quarter and said it expects profitability to be stronger in the second half of the year.

So far, earnings have been solid, with more than 80 percent of S&P 500 companies topping consensus profit forecasts.

Stocks mostly rose on Friday, led by solid earnings from McDonald's, General Electric and Microsoft, but declines in banks and technology shares pulled indexes from their highs of the day.

(Additional reporting by Ed Krudy; editing by Jeffrey Benkoe)