Stock futures were setting up for a decline to kick off the new month after factory activity in China slumped to a three-year low. 

S&P 500 futures were down 0.67%, Dow Jones Industrial Average futures slid 0.62%, and Nasdaq futures tumbled 0.52%. 

The latest reading on China's factory activity fell further into contraction territory with the Purchasing Managers' Index dropping to 49.4 in January from 49.7 a month earlier. Factory activity has been in contraction for sixth straight months, triggering fears over the health of the world's second-largest economy and officials' ability to correct course through stimulus measures. 

Weaker data from China also exacerbated worries over demand for crude oil. West Texas Intermediate crude oil fell 2.5% to $32.81 a barrel. Prices have fallen 14% since the beginning of the year. 

U.S. consumer spending remained flat in December even as personal income rose, according to the latest data from the Commerce Department. Income rose 0.3% over the month, while the U.S. savings rate increased 5.5% from 5.3%. Consumers have benefited from lower gas prices in the past few months which economists had hoped would fuel increased consumer spending.  

Twitter (TWTR) - Get Report jumped 6% before the bell on talk of a potential deal in the works with venture capitalist Mark Andreessen and private-equity firm Silver Lake Partners. Twitter has yet to comment on the rumors.

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Alere (ALR) jumped by as much as 50% in premarket trading after Abbott Laboratories (ABT) - Get Report agreed to buy the company in a deal worth $5.8 billion. Abbott will pay $56 a share, a 50% premium on Friday's closing price. The deal will grow Abbott's diagnostics testing portfolio. 

Credit Suisse (CS) - Get Report and Barclays (BCS) - Get Report moved lower after agreeing to pay $154.3 million to settle government investigations into their "dark pool" exchanges. The Securities and Exchange Commission and the New York Attorney General had been investigating claims the banks misled clients about being able to safely trade on their "dark pool" financial exchanges. The settlement is the largest for investigations into privately-run stock exchanges. 

Dominion Resources (D) - Get Report  fell more than 2% after agreeing to buy Questar (STR) in a cash deal valued at $4.4 billion. The Virginia-based energy company will pay Questar shareholders $25 a share, around a 30% premium to its January average price. The deal will likely close by the end of the year. 

Nokia (NOK) - Get Report slumped 11% after issuing disappointing guidance following a patent deal agreement with Samsung Electronics. The company expects to receive around 1.3 billion euros ($1.4 billion) in cash through to 2018 thanks to the patent agreement with Samsung. Investors had hoped for higher revenue from the deal. 

Cardinal Health (CAH) - Get Report added more than 1% after quarterly earnings exceeded estimates. The healthcare company earned an adjusted $1.30 a share, 4 cents above forecasts, while revenue surged 23% to $31.4 billion. Cardinal also issued full-year guidance of $5.15 to $5.35 a share, in line with expectations of $5.29. 

Health insurer Aetna (AET) fell 0.4% in premarket trading despite a better-than-expected quarter. The company said fourth-quarter profit jumped 38% as revenue rose 2% to $15.09 billion. Adjusted earnings of $1.37 a share beat estimates of $1.20 a share.

HSBC (HSBC) - Get Report fell more than 2% before the bell on reports the bank is imposing hiring and pay freezes across its divisions worldwide. The largest bank in Europe is focusing on cost-cutting to drive profits higher in the face of a tougher environment for financial institutions. Reports last week suggested HSBC could move headquarters to Hong Kong.