Apple's soggy post-earnings performance (see below), a flood of other earnings news and weaker oil prices are weighing on equities, with U.S. stock index futures swimming in the red. Of the 150 S&P companies that have reported so far, 75.3% have beaten analyst expectations, but poor corporate forecasts appear to be the negative catalyst behind the share pullback and others feel the results haven't been good enough. "We're seeing positive but not spectacular growth," said Jon Adams, senior investment strategist at BMO Global Asset Management.

Economy

In a speech at a think-tank event in Berlin, ECB President Mario Draghi defended his of policy of ultra-low rates, but voiced concern about "distortions that can result" if they are "in place for too long." He also declared victory in the bank's fight against deflation, saying the ECB had "succeeded" in removing the threat of a vicious spiral of falling prices and ever weaker demand.

Theresa May's government is backing the expansion of London's Heathrow airport, saying the construction of a third runway will prove that Britain is open for business after the Brexit vote. However, the £18B infrastructure project still faces a range of political and legal challenges before a final decision on its future is made. Another Tory civil war cleared for takeoff?

A planned EU-Canada summit to sign a free trade deal is still possible tomorrow, European Council President Donald Tusk declared, as Belgian politicians entered a second day of talks on the future of the pact. Without assent from its regions and linguistic communities, the country cannot sign CETA. Progress has been made on investment issues, but agricultural problems still need to be discussed.

The People's Bank of China is making changes to its so-called Macro Prudential Assessment risk-tool to broaden its regulatory oversight to include wealth management products often sold by banks and not counted on their balance sheets. The move marks another step in the PBOC's efforts to control rising leverage in the nation's financial system and underscores worries that unsustainable credit could dent an already slowing economy.

The U.S. policy of trying to persuade North Korea to give up its nuclear weapons "is probably a lost cause" and the best hope is to cap its capability, according to U.S. National Intelligence director James Clapper. In September, the country carried out its fifth and largest nuclear test, and has conducted two atomic explosions and more than 20 ballistic missile tests this year.

NATO will press allies today to contribute to its biggest military build-up on Russia's borders since the Cold War, as the U.S. looks for binding commitments from Europe to fill future deployments. The battle groups have taken on greater symbolism since Russia pulled out of several nuclear disarmament agreements in the past two months, moved nuclear-capable missiles into its Baltic exclave and strengthened its military presence in Turkey.

Stocks

Apple -3.4% premarket after the tech giant reported its first decline in annual revenues in over a decade, but forecast a return to growth next quarter. Meanwhile, iPhone sales continued their decline, falling 5% from the previous year, although that's an improvement from the 15% drop seen in fiscal Q3. Apple's (NASDAQ:AAPL) cash pile also continued to swell to a record of over $237B - if that was its own public company it would be the world's fourteenth largest.

Overnight earnings roundup: Nintendo (OTCPK:NTDOY) revealed an operating loss of ¥5.95B in the period from March to September, while lowering its outlook and dividend. Airbus (OTCPK:EADSY) missed forecasts on supply chain issues, but the aircraft maker maintained its full year guidance. Brazil provided some bright side for Santander (NYSE:SAN) as a pick-up in performance lifted earnings above expectations, offsetting Brexit concerns. Provisions ate into the quarterly profit at Lloyds (NYSE:LYG), as the bank set aside another £1B to pay compensation for mis-sold payment protection insurance. Bayer (OTCPK:BAYRY) raised guidance for the full year on strong pharma results in its first quarterly scorecard since securing the Monsanto (NYSE:MON) merger.

Grappling with cost cuts and deteriorating market conditions, Ericsson (NASDAQ:ERIC) has appointed Borje Ekholm President and CEO, effective January 16, 2017. "He has a solid understanding of both the technology and business implications of the ongoing convergence of telecoms, IT and media," Chairman Leif Johansson said in a statement.

Media mogul Sumner Redstone is suing two ex-girlfriends for civil claims including elder abuse, marking the latest litigation surrounding the 93-year-old billionaire. Redstone alleges he was forced to borrow $100M from National Amusements, the private company that holds his voting shares of CBS and Viacom (VIA, VIAB), to cover the tax obligations on gifts he gave the women.

Following an 18-month probe by industry regulator Ofcom, Vodafone (NASDAQ:VOD) has been fined £4.6M for "serious and sustained breaches of consumer protection rules," including mis-selling, inaccurate billing and poor handling of complaints. "We deeply regret these system and process failures," the telecoms giant said. "We offer our profound apologies to anyone affected by these errors."

Hedge fund Trilogy Capital Management, the last holdout bondholder of Caesars Entertainment's (NASDAQ:CZR) bankrupt operating unit, has agreed to support the casino group's restructuring and halt litigation. The deal removes the threat of a judgment against Caesars, which was facing lawsuits by hedge funds including Trilogy over guarantees on its operating unit's bonds. CZR +2% premarket.

Auto news: Volkswagen (OTCPK:VLKAY) has received final court approval of a $14.7B settlement that could get nearly half a million diesel-powered cars off U.S. roads. Mercedes-Benz (OTCPK:DDAIF) is launching a pickup truck in late 2017, dubbed the new "X-Class," entering one of the most lucrative segments in the car industry. OnStar Go! General Motors (NYSE:GM) and IBM are combining AI system Watson with OnStar in an effort to market new services to drivers.

Separately, Apple is said to have dozens of software engineers in Canada building a car operating system and many of its staff were hired away from BlackBerry's (NASDAQ:BBRY) QNX. Another Apple (AAPL) team is developing software that will guide future self-driving cars and run on the OS, sources told Bloomberg, stating the company has developed VR simulators that test programs without taking the system onto public roads.

Hakuna Takata? Not yet. Toyota (NYSE:TM) is recalling another 5.8M cars across the globe over potentially faulty parts made by the Japanese air bag supplier. About 69M Takata (OTCPK:TKTDY) inflators have so far been recalled due to possible rupture in a crisis that has been linked to at least 16 deaths.

Northrop Grumman's winning bid to build the U.S. Air Force's new bomber held "significant structural advantages" over a competing proposal by Boeing (NYSE:BA) and Lockheed Martin (NYSE:LMT), according to a declassified ruling. The report also said its review of Boeing's objection filed after the $80B award to Northrop (NYSE:NOC) "provided no basis on which to sustain the protest." NOC +2% premarket.

Yahoo's been in the crosshairs over a purported program made at the behest of government intelligence to spy on its users - and now AT&T (NYSE:T) is being linked to creating a program to sell vital user information to law enforcement agencies for millions (of taxpayer dollars), The Daily Beast reports. As with Yahoo (NASDAQ:YHOO), the AT&T report comes on the heels of critical M&A activity, as the telecom giant works to engulf Time Warner (NYSE:TWX) and become a media powerhouse.

Google Fiber is halting its rollout in 10 cities and laying off staff as its chief executive Craig Barratt steps down, dealing a major setback to the Internet giant's ambitions of blanketing the nation in super-speedy Internet. The change-up comes months after the company acquired Webpass, largely seen as an admission that fixed wireless might be a preferable route to laying fiber. GOOG is down slightly premarket.

Tuesday's Key Earnings

3M (NYSE:MMM) -3% cutting its guidance.
Apple (AAPL) -3.4% AH posting its first revenue decline in 15 years.
Baker Hughes (NYSE:BHI) +4.3% reporting a less-than-expected loss.
Caterpillar (NYSE:CAT) -1.8% after lowering its forecasts.
Chipotle (NYSE:CMG) -2.7% AH on slipping comparable store sales.
Corning (NYSE:GLW) -3.8% following soft revenues.
DuPont (NYSE:DD) -0.6% on a possible Dow merger delay.
Eli Lilly (NYSE:LLY) +0.4% following a soft quarter.
Freeport-McMoRan (NYSE:FCX) +3.5% swinging to a Q3 profit.
General Motors (GM) -4.2% on Brexit impact factors.
Lockheed Martin (LMT) +7.3% lifting its outlook.
Merck (NYSE:MRK) +2% after beating estimates.
Pandora (NYSE:P) -8.6% AH cutting its revenue forecast.
Panera Bread (NASDAQ:PNRA) -2% AH on strong comparable sales.
Procter & Gamble (NYSE:PG) +3.4% reporting underlying sales growth.
Sprint (NYSE:S) -6.1% despite better-than-expected earnings.
Under Armour (NYSE:UA) -13.2% warning of future growth.
United Tech (NYSE:UTX) +1.9% boosting its guidance.
Valero (NYSE:VLO) +4.8% after topping expectations.

Today's Markets

In Asia, Japan +0.2% to 17391. Hong Kong -1% to 23325. China -0.5% to 3116. India -0.9% to 27836.
In Europe, at midday, London -0.9%. Paris -0.8%. Frankfurt -1.1%.
Futures at 6:20, Dow -0.5%. S&P -0.4%. Nasdaq -0.6%. Crude -1.5% to $49.22. Gold -0.1% to $1271.90.
Ten-year Treasury Yield +2 bps to 1.77%

Today's Economic Calendar

7:00 MBA Mortgage Applications
8:30 International trade in goods
9:45 PMI Services Index Flash
10:00 New Home Sales
10:30 EIA Petroleum Inventories
11:30 Results of $15B, 2-Year FRN Auction
1:00 PM Results of $34B, 5-Year Note Auction