Wall Street set for modest bounce after selloff

NEW YORK (Reuters) - U.S. stocks were set for a modest bounce on Monday after the S&P 500 suffered its worst weekly drop since May 2012 and the Dow moved into negative territory for the year on global growth concerns.

The benchmark S&P index slumped 3.1 percent last week to sit just above its support level, the 200-day moving average of around 1,905, and is now down 5.2 percent from its record high set on Sept. 18. The declines were sparked by a cut in the global growth forecast by the International Monetary Fund and disappointing economic data in Europe.

A serious slowdown in the global economy could lead the U.S. Federal Reserve to delay an increase in interest rates if deemed serious enough, Fed officials said over the weekend.

Earnings season will pick up this week, with results expected from Dow components Intel , Johnson & Johnson , UnitedHealth , American Express and General Electric , as well as financials Morgan Stanley , Citigroup , Bank of America and Wells Fargo .

"Some of it is going to be a knee-jerk reaction bounce but I think you are going to get a better idea once the earnings start," said Ken Polcari, Director of the NYSE floor division at O?Neil Securities in New York.

"I think you are going to be surprised, earnings are going to be solid and the guidance forward is going to be OK, so I don?t think this nervousness is justified."

Volume may be muted on Monday in light of the U.S. Columbus Day holiday, which could create more volatility.

Canadian Pacific Railway Ltd has approached CSX Corp about merging the two North American railroad operators to create a transcontinental carrier worth more than $60 billion, according to the Wall Street Journal. CSX shares jumped 10.1 percent in premarket trading.

Ebola-related stocks were among the most active in premarket trade after a Texas health worker became the first person in the United States to contract the virus. She had treated a Liberian who died of the disease in Dallas last week, raising concern about how U.S. medical guidelines were breached.

Lakeland Industries , a maker of garments to guard against hazardous materials, jumped 15.3 percent to $22.64 before the opening bell while Alpha Pro Tech , a maker of face masks, was up 17.5 percent to $8.73.

Futures snapshot at 9:08:

* S&P 500 e-minis were up 6.25 points, or 0.33 percent, with 432,749 contracts changing hands.

* Nasdaq 100 e-minis were gaining 4.75 points, or 0.12 percent, in volume of 60,970 contracts.

* Dow e-minis <1YMc1> were up 33 points, or 0.2 percent, with 54,534 contracts changing hands.

(Reporting by Chuck Mikolajczak; Editing by Lisa Von Ahn, Jeffrey Benkoe and Nick Zieminski)

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