Stocks headed for a lower open on Monday as news of a record $61.7 billion loss at embattled insurer American International Group
Wall Street would thus extend a global stock market rout that slammed stock markets around the world, with European benchmark indexes <.FTEU3> down 3 percent or more.
Adding to the gloom were comments by billionaire investor Warren Buffett who said the economy will be in shambles throughout 2009.
Before the bell, financial shares were among top drags, with Goldman Sachs
The problem is that no-one yet has a feel that the recession will end this year, said John Wilson, chief technical strategist at Morgan Keegan in Memphis, Tennessee.
The depth and duration of the recession is up for question and until people determine that, I think the market will have a tough time making a lot of progress.
The Dow would likely open below 7,000, a level that the blue-chip index last fell through, on an intraday basis, in late October 1997.
S&P 500 futures fell 15.50 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures tumbled 102 points, and Nasdaq 100 futures lost 18 points.
AIG, which received $150 billion in U.S. taxpayer aid last year, will get access to an additional $30 billion under the government's revised plan announced on Monday.
Its fourth-quarter loss was the biggest in U.S. corporate history. Futures briefly cut losses on Monday following government data that showed a rebound in personal expenditures and incomes in January.
Also weighing on markets was news that EU leaders were considered not to have reached any meaningful agreement on a rescue package for eastern Europe.
On the economic front, the Institute for Supply Management's manufacturing report for February is due at 10 a.m..
(Additional reporting by Ryan Vlastelica; Editing by James Dalgleish)