The Dow Jones industrial average (INDU) fell 51 points, or 0.6%. The S&P 500 (SPX) index lost 9 points, or 1%. The Nasdaq composite (COMP) gave up 15 points, or 0.9%.

The Dow Jones Transportation (DJT) average, which includes airlines, fell 4.7%.

Stocks slumped in the first half-hour of trade, turned higher near midday and then slipped again in the afternoon.

Should the disease develop into an epidemic, world economies would be hurt at a time when a global recession is already exerting a crippling impact. Such fears were dragging on stocks.

However, the market was also vulnerable to a pullback anyway, with the recent rally losing steam in a busy week for quarterly results and economic news, and ahead of the results of Treasury's "stress tests" for the largest U.S. banks.

"Airline and hotel stocks are getting hit today and that's appropriate if the swine flu has a big impact on travel," said Brian Battle, vice president at Performance Trust Capital Partners. "But I think we're more concerned that it's the middle of the earnings reporting period and major companies are due out this week."

In addition, there are jitters ahead of the release of the stress tests next Monday. "We need to know who cleared and who didn't, and for those who didn't, what's the federal government going to do about it?"

All three major gauges gained for 6 straight weeks, adding between 25% and 30% on bets that the worst for the economy and corporate profits has already happened. But investors showed some hesitation last week and only the Nasdaq managed to end higher for the seventh week in a row.

"I think this has been a bear market rally and we're likely to see a bigger pull back," said Tyler Vernon, chief investment officer at Biltmore Capital.

"Swine flu will probably have a short-term impact," he said. "But I think it's going to the first shoe to fall in a series of shoes over the next month."

On Tuesday, Pfizer and Bristol-Myers are due to report results. The April consumer confidence report and the S&P/CAseShiller Home Price index for March are both due in the morning as well.

The Federal Reserve Board begins its two-day policy setting meeting Tuesday.

Swine flu: Declared a public health emergency by the World Health Organization, swine flu dragged on markets globally, particularly in Europe.

In the United States, the federal government declared a public health emergency and President Obama called the outbreak a "cause for concern" but not a "cause for alarm."

As many as 103 deaths in Mexico are believed to have been caused by the disease. At least 40 cases have been diagnosed in the United States.

The European Union health commissioner advised Europeans to avoid non-essential travel to both Mexico and the United States. However, the acting director of the Centers for Disease Control and Prevention said such an advisory was unwarranted.

Automakers: On Sunday, Chrysler said it won some key concessions from its union, a critical step as it races against the clock to avoid filing for bankruptcy protection. Chrysler has until Thursday to hammer out a deal with its creditors and Italian automaker Fiat. Chrysler is privately held.

General Motors (GM, Fortune 500) - which has until June 1 to cut debt and avoid bankruptcy - announced a broad restructuring plan Monday. GM will cut 23,000 jobs by 2011, including those already announced in its recent viability plan. The company will also eliminate its Pontiac brand and cut 40% of its dealer network. GM shares rallied nearly 21%.

Quarterly results: Dow component Verizon Communications (VZ, Fortune 500) reported earnings of 63 cents per share, up from 61 cents a year ago. Analysts surveyed by Briefing.com thought income would fall to 59 cents per share. The telecom benefited from its purchase of rival telecom Alltel and growth in customers. Verizon fell 1.5%.

Among other movers, big bank shares slumped, dragging down the KBW Bank (BKX) sector index by 4.9%.

A variety of airlines plunged, lowering the Amex Airline index by over 10%.

Market breadth was positive. On the New York Stock Exchange, winners beat losers two to one on volume of 1.4 billion shares. On the Nasdaq, advancers topped decliners two to one on 2.23 billion shares.

Bonds: Treasury prices rose, lowering the yield on the benchmark 10-year note to 2.92% from 2.99% Friday. Treasury prices and yields move in opposite directions.

Lending rates were mixed. The 3-month Libor rate fell to 1.05% from 1.07% Friday, according to Bloomberg.com. The overnight Libor rate rose to 0.21% from 0.2%. Libor is a bank-to-bank lending rate.

Other markets: In global trading, Asian markets ended mostly lower and European markets ended mixed.

In currency trading, the dollar gained versus the euro and fell against the yen.

U.S. light crude oil for June delivery fell $1.41 to settle at $50.14 a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery fell $5.90 to settle at $908.20 an ounce. 

NEW YORK (CNNMoney.com) -- U.S. stock futures sank Monday as investors worried about the economic impact of a global swine flu outbreak.

At 7:35 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.

Swine flu outbreak: The World Health Organization has called the outbreak of swine flu a "public health emergency of international concern."

Mexico seems to be the center of the outbreak, although cases have spread to countries around the world.

As many as 103 deaths in Mexico are thought to have been caused by swine flu, CNN reported. In the United States, the largest number of cases has been reported in New York City.

Most U.S. airlines, including Delta (DAL, Fortune 500), American Airlines (AMR, Fortune 500), Continental (CAL, Fortune 500), United (UAUA, Fortune 500) and U.S. Airways (LCC, Fortune 500) have begun to waive fees for customers who have tickets to Mexico and wish to change their travel plans due to the flu outbreak.

"There are certain companies that are being affected by the flu, and people are worrying that this could mushroom into full-blown epidemic," said Peter Cardillo, chief market economist at Avalon Partners. "Obviously that would cut into GDP, and with global economies still in recession, that would add to economic woes."

Market downgrade: Credit Suisse downgraded its rating on U.S. stocks one notch on Monday, saying the equities were expensive relative to those in other countries. The bank's report also said that first quarter earnings have been mediocre.

"Markets are also lower because Credit Suisse downgraded its rating on the U.S. market," Cardillo said. "Combined with the flu concerns, people have a reason they were looking for to take some profits off the table."

Cardillo said that many investors are worried that the seven-week market rally will end this week, as a number of economic reports -- including an initial report on first-quarter gross domestic product -- will likely pressure stocks. He believes the flu outbreak and market downgrade have given anxious investors the excuse to sell off some of their positions.

Autos: Chrysler reached a tentative labor agreement with the United Auto Workers -- a key step in final efforts to help the automaker avoid bankruptcy. The UAW announced the deal Sunday.

Meanwhile, General Motors (GM, Fortune 500) is due to provide an update on the company's turnaround plan. CEO Fritz Henderson is set to announce changes at 9 a.m. ET.

Earnings: Whirlpool (WHR, Fortune 500) on Monday reported profit fell 27% and sales dropped 23% in the first quarter. The company cut its outlook on exports.

Verizon Communications (VZ, Fortune 500) reported slighly higher earnings than a year earlier. Qualcomm (QCOM, Fortune 500) posted a net loss.

World markets: Concern about the economic fallout of the flu outbreak pressured airline and hotel stocks in overseas trading.

Most Asian shares tumbled, although Japan's Nikkei finished the session with slight gains. Major European markets were all lower in midday trading.

Oil and money: Oil prices tumbled, with U.S. light crude for June delivery falling $2.78 to $48.77 a barrel in electronic trading.

The dollar edged higher against the euro and was down slightly versus the yen. 

Roughly one-third of the S&P 500 reports results this week. Major economic reports are due on gross domestic product growth and consumer spending. The Federal Reserve holds its next policy-setting meeting. Chrysler's fate hangs in the balance. And investors gear up for the release of the "stress tests" of the major U.S. banks, due out in the following week.

Last week, regulators released a few details on how the government is running its tests, but results won't be announced until May 4. Some early results could start to trickle in later in the week.

"I think there's going to be some hesitation ahead of May 4th, particularly after the move we've seen over the last few weeks," said Christopher Colarik, portfolio manager at Glendmede

The major stock gauges rose for six straight weeks, with the Nasdaq composite making it to seven, on bets that the economy is closer to stabilizing and corporate profits are near to bottoming. The S&P 500 index gained almost 29% during that time. But last week's trading was more choppy amid worries of too much, too fast.

"I think investors are breathing a sigh of relief that analysts' estimates may have been too low," said Fred Dickson, chief market strategist at D.A. Davidson & co. "But I think stocks will face a real test this quarter, because I don't think the economic data will show as much improvement as investors might like."

Results: More than one-third of the S&P 500 companies have reported results and profits are currently expected to have declined 35% versus a year ago, according to the latest from Thomson Reuters.

Standouts this week include Dow components Exxon Mobil (XOM, Fortune 500), Chevron (CVX, Fortune 500), Pfizer (PFE, Fortune 500), Verizon Communications (VZ, Fortune 500) and Procter & Gamble (PG, Fortune 500). (See below for details.)

Chrysler: The hard-hit company is facing a Thursday deadline to close deals with creditors, its labor union and Italian automaker Fiat, or face bankruptcy protection and possible liquidation. Chrysler has been operating on $4 billion in federal aid and needs more to stay afloat. The company is privately owned.

Last week, rival General Motors (GM, Fortune 500) said it is temporarily shutting down down 13 of 20 North American plants this summer to reduce inventory. The company is also planning to shutter its Pontiac brand, with an announcement expected Monday.

Healthier rival Ford Motor (F, Fortune 500) reported a steep quarterly loss Friday that was nonetheless not as steep as analysts had thought. The company said it won't need a federal loan like its rivals unless the slowdown gets significantly worse.

Over the last week, the woes of the industry have had a limited impact on Wall Street, but a Chrysler bankruptcy could be a very big deal.

Nearly 30% of the S&P 500 reports results this week. Here are some of the highlights.

Monday: Telecom Verizon is expected to have earned 59 cents per share versus 61 cents a year ago, according to a consensus of analysts surveyed by Thomson Reuters.

Tuesday: Drugmaker Pfizer is expected to have earned 49 cents per share versus 61 cents a year earlier.

Thursday: Exxon Mobil is expected to have earned 94 cents per share, down from $2.03 per share a year ago.

Friday: Fellow oil behemoth Chevron is expected to have earned 81 cents per share versus $2.48 a year ago.

Tuesday: The April consumer confidence index from the Conference Board is expected to have rise to 28.8 from 26 in March. The S&P/CaseShiller Home Price index is expected to have fallen 18.8% from 18.97%.

The Federal Reserve Board holds its two-day policy setting meeting, with a decision on interest rates expected at the conclusion of the meeting Wednesday afternoon. The Fed is widely expected to hold a key bank lending rate steady near 0%.

Wednesday: First-quarter gross domestic product growth (GDP) is expected to have contracted at a 4.9% annualized rate, not as sharply as the 6.3% in the fourth quarter.

Thursday: A heavy day for economic news includes reports on weekly jobless claims, the first-quarter employment cost index and manufacturing in the Midwest.

The standout is the government's personal income and spending report for March. Income is expected to have fallen 0.2% in the month, as it did in February. Spending is expected to have fallen 0.1% after it rose 0.2% in March.

Friday: Reports are due on consumer sentiment, factory orders, and auto and truck sales. The biggest potential market mover will be the Institute for Supply Management's manufacturing index. The index is expected to have inched up to 38 from 36.3 -- still territory considered recessionary. 

The Dow Jones industrial average (INDU) added 82 points, or 1%, more than an hour into the session. The S&P 500 (SPX) index gained 8 points or 1%. The Nasdaq composite (COMP) gained 22 points, or 1.3%.

Stocks managed a late-session rally Thursday at the end of a turbulent week on Wall Street. Stocks are down this week in the aftermath of a six week advance that boosted the S&P 500 nearly 29% off of 12-year lows.

Bets that the worst is over for the economy and corporate America have fueled the run, but some market pros are worried the run has been too much, too fast.

In addition to the profit reports and economic news, investors are also gearing up for more details on how the government is running its "stress tests" of the leading U.S. banks. Results from those tests won't be announced until May 4.

Automakers: Ford Motor (F, Fortune 500), considered to be the healthiest of the three Detroit automakers, said it lost $1.4 billion in the first quarter as it contended with the worst quarter for the industry in 26 years.

Excluding special items, Ford said it lost $1.8 billion or 75 cents per share, versus a profit of 20 cents a year earlier. Analysts surveyed by Briefing.com thought it would lose $1.23 per share. Ford's revenue also plunged versus a year ago but topped estimates.

Ford CEO Alan Mulally said he believes the company can continue to function without receiving a federal bailout like rivals Chrysler and General Motors (GM, Fortune 500). Ford shares jumped 16% Friday morning.

Time is running out for Chrysler, which could enter Chapter 11 bankruptcy protection as soon as next week, according to reports, if it can't close deals with creditors and Italian automaker Fiat. Chrysler is privately owned.

Meanwhile, General Motors (GM, Fortune 500) said late Thursday that it will temporarily shut down 13 of 20 North American plants this summer to cut inventory. The company has until June 1 to cut its debt and labor costs or face Chapter 11 as well. Shares gained 4% Friday.

Quarterly results: Dow component 3M (MMM, Fortune 500) reported weaker quarterly sales and earnings Friday morning and cut its full-year earnings forecast for the second time. The company, which makes everything from Scotch tape to power lines, is seen as a proxy for the economy because of the broad range of its business.

After the close Thursday, Microsoft (MSFT, Fortune 500) reported lower-than-expected quarterly sales on weaker earnings that met estimates. Shares of the Dow component gained 7% Friday.

Dow component American Express (AXP, Fortune 500) reported weaker quarterly earnings that topped estimates, also after the close Thursday. Shares gained 10.5% Friday morning.

Amazon.com (AMZN, Fortune 500) reported higher quarterly sales and earnings that topped estimates late Thursday. Shares gained 5% Friday.

Dow stock Honeywell (HON, Fortune 500) reported weaker quarterly sales that topped estimates on weaker earnings that met estimates Friday morning. The company also cut its 2009 profit outlook, due to the global economic slowdown.

Schlumberger (SLB) reported weaker earnings that topped forecasts on weaker sales that missed estimates. The leading oilfield services company in the world also gave a dour forecast for the industry for the rest of this year and for 2010.

Economy: March new home sales fell from the previous month, after that month's sales figure was revised higher, the Census Bureau reported Friday morning. Sales fell to a 356,000 annual unit rate from an upwardly revised 358,000 unit annual rate in February. Economists surveyed by Briefing.com expected sales at a 337,000 unit annual rate.

March durable goods orders fell 0.8% versus forecasts for a drop of 1.5%. Orders of goods meant to last 3 years or more rose 3.4% in February.

Bonds: Treasury prices slumped, raising the yield on the benchmark 10-year note to 2.98% from 2.91% Thursday. Treasury prices and yields move in opposite directions.

Lending rates were mixed. The 3-month Libor rate fell to 1.07% from 1.09% Thursday, according to Bloomberg.com. The overnight Libor rate held stead at 0.2%. Libor is a bank-to-bank lending rate.

Other markets: In global trading, Asian markets ended mixed. European markets rallied in afternoon trading.

In currency trading, the dollar fell versus the euro and the yen.

U.S. light crude oil for June delivery rose $1.54 to $51.16 a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery rose $1.20 to $907.80 an ounce. 

"Price action will be driven by leaks relating to the stress test and to a much lesser extent home sales and durable good orders," according to a research report from MF Global.

In an effort to determine which U.S. banks are healthy enough to withstand another financial shock, the Treasury Department has conducted so-called stress tests on 19 of the nation's largest banks.

Official results will not be made public until May 4, but Treasury officials are reportedly planning to outline Friday how the tests were conducted.

"The amount of information which will be provided or leaked to the public is unknown, and the market could be very rumor driven today," bond analysts at MF Global said.

Meanwhile, a report on orders for big-ticket items such as computers and refrigerators is due at 8:30 a.m. ET. Government data on sales of new homes in March is due at 10 a.m. ET.

The market is also bracing for another big dose of supply. The Treasury Department said Thursday it plans to auction a total of $101 billion in 2-year, 5-year and 7-year notes next week.

At the same time, the Federal Reserve is set to buy more Treasurys Monday and Thursday as part of its campaign to buy $300 billion in U.S. debt.

By buying back government debt, the Fed hopes to drive down interest rates on consumer and business loans, such as mortgages, to help revive the economy.

Stock futures were higher, suggesting a positive opening for Wall Street, after the major indexes closed higher in the previous session.

Investors are also focused on first-quarter corporate results due Friday. Ford Motor (F, Fortune 500) reported a smaller than expected $1.4 billion loss in the quarter early Friday morning. Other major companies slated to announce earnings: 3M (MMM, Fortune 500), Honeywell (HON, Fortune 500), Schlumberger (SLB) and Xerox (XRX, Fortune 500).

Bond prices: The benchmark 10-year note was down 6/32 to 98-11/32, and its yield rose to 2.94% from 2.92% late Thursday. Bond prices and yields move in opposite directions.

The 30-year bond fell 11/32 to trade at 94-12/32, and its yield rose to 3.82% from 3.79%.

The 2-year note was down less than 1/32 to 99-27/32, and its yield edged up to 0.95% from 0.94%.

The yield on the 3-month note was unchanged at 0.10%.

Meanwhile, lending rates were mixed. The 3-month Libor fell to 1.07% from 1.09% Thursday, according to Bloomberg.com. The overnight Libor was unchanged at 0.2%.

Libor, the London Interbank Offered Rate, is a daily average of rates that 16 different banks charge each other to lend money in London.