Stocks set for ugly open following jobs report

@CNNMoneyInvest April 9, 2012: 8:32 AM ET

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NEW YORK (CNNMoney) -- U.S. stocks were set to drop at the open Monday, as investors deal with the hangover from last week's disappointing jobs report.

In addition, a higher-than-expected reading on inflation in China added to the worries.

However, tech shares may buck the trend. AOL (AOL) shares surged more than 30% in premarket trading Monday after the company said it agreed to sell more than 800 patents to Microsoft (MSFT, Fortune 500) for about $1 billion in cash.

Dow Jones industrial average (INDU), S&P 500 (SPX) and Nasdaq (COMP) futures were down about 1%. Stock futures indicate the possible direction of the markets when they open at 9:30 a.m. ET.

On Friday, the Labor Department said the U.S. economy added 120,000 jobs in March, following three straight monthly gains of 200,000 jobs or more, a trend that economists expected would continue.

Although U.S. markets were closed in observance of Good Friday, U.S. stock futures were trading Friday, and they tumbled as investors expressed their disappointment in the jobs numbers.

Meanwhile, investors flocked toward the safety of U.S. government debt, pushing the yield on the 10-year Treasury notes to the lowest level in nearly a month.

But although Monday looks to be weak, Peter Cardillo, chief market economist for Avalon Partners, said he did not believe the jobs numbers would prompt a dramatic bear run.

"This has been a very uneven recovery, and from time to time, this happens," he said. "I think the declines will be contained."

Cardillo added that he expected investors to be cautious ahead of the looming round of corporate results, which will begin coming in later this week.

First-quarter earnings: They won't be pretty

With no major economic reports on tap for Monday, investors will be stuck digesting the dour jobs report and the decidedly mixed economic data that has been delivered in recent weeks.

Economy: The Chinese government reported Monday that inflation rose at an annual rate of 3.6% in March, higher than expected.

The report comes amid concerns over whether China will be able to ease back from the breakneck growth of recent years without experiencing a "hard landing."

In the evening, Federal Reserve Chairman Ben Bernanke will deliver a speech in Stone Mountain, Ga., on "fostering financial stability."

Following the disappointing jobs report, investors will pay close attention to any comments from the central bank chief on the current economic situation.

Companies: Shares of aluminum producer Alcoa (AA, Fortune 500) were down 1.4% ahead of Monday's open, with worries about the materials sector looming ahead of the latest round of corporate results. Analysts are predicting a 14.5% drop in earnings for the sector, according to FactSet.

Alcoa will report after the closing bell on Tuesday, marking the unofficial start of earnings season.

AT&T (T, Fortune 500) shares were down 0.5% ahead of the open. The company said Sunday that it had yet to reach a deal with its union on a new contract after the old one expired, but that workers would stay on the job while negotiations continue.

Beauty company Avon Products (AVP, Fortune 500) announced Monday that it had named former Johnson & Johnson (JNJ, Fortune 500) executive Sheri McCoy as its new CEO. The company was in the news last week after it rejected a $10 billion takeover bid from industry rival Coty Inc.

Survey: Europe stil a thorn, but out of crisis mode

World markets: Markets in Germany, the United Kingdom and France were closed for the Easter holiday.

In Asia, Japan's Nikkei (N225) lost 1.5%, while the Shanghai Composite (SHCOMP) slid 0.9%. Hong Kong was closed.

Currencies and commodities: The dollar gained against the euro and the British pound but fell against the Japanese yen.

Oil for May delivery slipped $1.62 to $101.69 a barrel.

Gold futures for April delivery rose $13.10 to $1641.60 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury rose, pushing the yield down to 2.03%. To top of page

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