Market meltdown aftermath

NEW YORK (CNNMoney.com) -- Stocks could be in for more pain Monday following last week's selloff, the worst on Wall Street in years.

At 8:14 a.m. ET, futures were lower after being narrowly higher earlier in the morning, as the fears that sent stocks reeling last week remain at the surface.

David Kelly, managing director and an economic advisor for Putnam Investments, said it wasn't any specific news that sent futures lower. Instead he attributed it to investors still not being certain about the impact that problems in subprime mortgages and corporate debt markets would have on the overall markets.

In the latest sign of trouble in the debt markets, American Home Mortgage Investment Corp. (Charts) announced late Friday that its banks are demanding it put up more cash after the mortgage lender wrote down the value of its loan and security portfolios significantly. Shares were down more than 25 percent in premarket trading.

"I think there's been a big increase in volatility in the last two weeks and I don't expect it to suddenly disappear," said Kelly. "There's a lot of nervousness out there. This is a classic issue that people think shouldn't be that bad, but no one can quite quantify it."

The trading day initially got off to a good start in overseas markets, as Asian stock indexes finished the session mostly higher. European stocks also rose in early trading, but then turned lower at about the same time that U.S. futures fell.

Credit woes triggered a global stock market plunge last week. The Dow Jones industrial average, a barometer of the market which tracks 30 large U.S. companies, suffered its worst week since March 2003.

Turmoil in the debt markets shook investors last week, raising concerns about a looming credit crunch. Tighter credit could bring the buyout boom, which has helped lift stock prices, to a halt.

It could also raise the borrowing costs for companies and pressure corporate earnings, and trim consumer spending, which is responsible for nearly three-quarters of the nation's economic activity.

Investors will have a number of earnings reports to mull this week.

Verizon Communications (Charts, Fortune 500), a Dow component telecom service provider, reported improved earnings excluding special items that met the forecast of analysts surveyed by earnings tracker First Call.

Later in the week two more Dow components, General Motors (Charts, Fortune 500) and Walt Disney (Charts, Fortune 500), are due to post results.

Economic readings due this week are the personal income and spending report, due Tuesday, which contains a key inflation measure, and the government's closely watched employment report, set to be released Friday.

Treasury prices were slightly higher, taking the yield on the 10-year note to 4.75 percent from the 4.76 percent level reached after bonds rallied Friday in reaction to the selloff in equities.

The dollar was lower against the euro and the yen. Treasury Secretary Henry Paulson arrived in China over the weekend to push the Chinese government to allow its currency to rise versus the dollar.

Oil prices fell in early trading, taking the price of U.S. light crude down 39 cents to $76.63 a barrel in electronic trading.

In major corporate news, the family that controls Dow Jones (Charts) is due to make a decision on the $5 billion takeover bid by News Corp. (Charts, Fortune 500) by the end of Monday.

Dutch bank ABN Amro (Charts) adopted a neutral position on two rival takeover offer it has received after withdrawing support for a bid from British bank Barclays (Charts).