MARKET SNAPSHOT: U.S. Stocks: Futures Lower After Japan Falls Into Recession

By Carla Mozee, MarketWatch Halliburton buying Baker Hughes in $35 billion deal

LONDON (MarketWatch) -- U.S. stock futures declined Monday, with Wall Street likely to start in the red after Japan -- the world's third-largest economy -- fell into recession, but shares of Baker Hughes Inc. look set to shine after the oil-services company agreed to a buyout.

Futures for the Dow Jones Industrial Average (DJZ4) dropped 38 points, or 0.2%, to 17,566, and those for the S&P 500 index (SPZ4) lost 6 points, or 0.3%, to 2,032. Nasdaq 100 futures (NDZ4) declined 8 points, or 0.2%, to 4,214.50.

Weakness set in after official data showed Japan's real gross domestic product shrank 1.6% in the third quarter, weighed by companies cutting inventories and subdued capital investment. Economists surveyed by The Wall Street Journal had on average been looking for the economy to expand by 2.25%.

Japanese stocks sank after the report, leaving the Nikkei Stock Average down 3%. The Japanese yen, meanwhile, slid to a seven-year low against the U.S. dollar (USDJPY), allowing the dollar buy more than Yen117. The country's Prime Minister Shinzo Abe said he will decide on whether to move forward with a planned sales-tax increase following analysis of the situation, according to media reports Monday. Abe may also call for a snap election to be held next month.

"The stock market and currency could remain volatile until Mr. Abe confirms his intentions. There is, of course, the prospect of further economic stimulus as well," said Richard Troue, head of investment analysis, at Hargreaves Lansdown, in a Monday note.

A pullback on Wall Street would follow a largely flat end to trading on Friday, when the S&P 500 (SPX) edged up 1 point and the Dow industrials (DJI) slipped 0.1%. The Nasdaq Composite (RIXF) rose 0.2%. The indexes last week marked a fourth week of gains.

Economic data: On Monday's docket, the Empire State index manufacturing index for November will be released at 8:30 a.m. Eastern Time, following by the 9:15 a.m. release of October industrial production figures.

Stocks to watch:Baker Hughes Inc.(BHI) shares bounced up 16% after Halliburton Co.(HAL) agreed to purchase its rival oil-services provider in a cash-and-stock deal valued at $34.6 billion. The transaction is valued at $78.62 for each share of Baker Hughes. Shareholders in Baker Hughes should receive 1.12 Halliburton shares plus $19 in cash for each share they own, and the deal is expected to close in the second half of 2015.

Pfizer Inc. and Germany's Merck KGaA said they'll work together to develop a new anti-cancer tumor treatment. Pfizer cut its 2014 per-share earnings view to between $1.40 and $1.49 as Merck will receive $850 million upfront in the venture.

Botox maker Allergan Inc. (AGN) neared a deal to be acquired by Actavis PLC(ACT), according to The Wall Street Journal. The WSJ said the deal will likely be at a premium to Activis's $59 billion market capitalization, with media reports suggesting it could be worth up to $65 billion. That would fend off Allergan's months-long attempt to thwart a hostile $53 billion bid by Valeant Pharmaceuticals International (VRX).

Other markets: December crude-oil futures (CLZ4) fell nearly 1%, resuming a run of losses. European stocks followed Japanese stocks lower, and gold futures (GCX4) were higher at around $1,186 an ounce.

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