Flu, banks to hurt stocks

NEW YORK (CNNMoney.com) -- U.S. stocks were poised to tumble at Tuesday's open as investors worried about the results of the government's stress tests of banks and the number of swine flu cases continued to rise.

At 8:30 a.m. ET, Dow Jones industrial average, Standard & Poor's 500 and Nasdaq-100 futures were sharply lower.

Futures measure current index values against perceived future performance and offer an indication of how markets may open when trading begins in New York.

Banks: Early results of the U.S. government's bank stress tests suggest that Bank of America (BAC, Fortune 500) and Citigroup (C, Fortune 500) may have to boost their capital, the Wall Street Journal reported.

Results of the stress tests are due to be released next week.

Bank of America shares fell 9% in premarket trading, while Citi dropped 5.5%.

Swine flu: Concerns about the economic fallout of the swine flu outbreak also are likely to keep weighing on investors.

The World Health Organization moved a step closer to declaring a pandemic. Economists say the outbreak could derail a global economic recovery if it isn't contained.

"The flu is going to continue to be a market story," said Art Hogan, chief market strategist at Jefferies & Co. "In 2003, SARS cost us tremendous amounts in terms of market capitalization because of the travel restrictions. We haven't heard about any of those yet, but investors worry that we might."

Corporate: Drugmakers Pfizer (PFE, Fortune 500) and Bristol-Myers Squibb (BMY, Fortune 500) reported earnings early Tuesday.

Pfizer's profit dropped 2%, but managed to beat Wall Street's estimates. The company's sales fell 8.3%, however, missing analysts' forecasts. Pfizer said the experiation of its patent on Zyrtec helped drive pharmaceutical sales down.

Bristol-Myers reported earnings that rose 3.4% in the quarter, meeting analysts' estimates. Sales were also up 2.5%, roughly in line with expectations. The company reaffirmed its 2009 outlook.

This week, more than 150 companies listed on the S&P 500 index will report their earnings.

Economy: At 10 a.m. ET, the Conference Board will release its Consumer Confidence Index for April. Economists expect the figure to rise to 26, slightly higher than March's extremely low level of 25.3, according to a consensus estimate of experts surveyed by Briefing.com. Last month, consumers' sentiment about the present situation fell to an all-time low of 21.5.

Also at 10 a.m. ET, Standard & Poor's and Case Schiller will report its monthly home price index for February. Analysts forecast home prices in the index's 20 surveyed U.S. cities will fall 18.7% from February 2008, after January prices dropped nearly 19% from a year earlier.

The Obama administration is expected to announce plans Tuesday to extend the government's Making Home Affordable program, including a plan to help homeowners by lowering payments on second mortgages.

"On top of having the busiest earnings and economic week we've had, we have the flu and the leak about the stress test," Hogan said. "The market had a significant upside in the past weeks, and it's not surprising that market's having a bit of a pullback now."

World markets: Worries about U.S. banks and the economic fallout of the swine flu outbreak hit global markets. Stocks in Asia finished lower, with Japan's Nikkei shedding 2.7%. In morning trading, European markets were all lower.

Money and other markets: Oil prices continued to fall Tuesday morning, slipping $1 to $49.14 a barrel.

The dollar rose slightly against the euro and British pound, but fell against the yen.