Stock index futures pointed to a fall of 2 percent at the open on Tuesday, tracking a sell-off in global equities, on worries over Europe's banking sector and as North Korea ramped up rhetoric against the South.
World stocks slid, with Japan's Nikkei closing down 3.1 percent and European shares dropping nearly 3 percent on renewed worries over the euro-zone banking sector after the Bank of Spain rescued a local lender over the weekend.
Three-month dollar Libor rates rose to their highest level since July as banks became warier of lending to European institutions. A higher interbank rate can crimp bank profits.
The euro neared a four-year low versus the dollar, and safe-haven Treasuries rallied.
It is pretty clear that the situation in Greece really has exposed sovereign debt problems everywhere, said Bruce Bittles, chief investment strategist at Robert W. Baird & Co in Nashville. The problems is that if this is a waterfall decline, then of course most of the damage in a waterfall comes near the end.
North Korea's threat of military action against the South helped send local shares to a 15-week closing low as the government in Seoul convened an emergency session. The threats followed the sinking of a South Korean warship, allegedly by the North, in March.
S&P 500 futures fell 26.2 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 sank 213 points, and Nasdaq 100 futures lost 41 points.
Some big banks and industrial stocks fell in premarket trading on fears that Europe's debt crisis, which originated in Greece, might derail a global economic recovery.
Bank of America Corp fell 3.1 percent to $14.92, and Alcoa Inc dropped 4.3 percent to $10.61. Chevron Corp was off 2.3 percent to $71.75, as oil futures were caught up in the commodities sell-off, falling nearly 4 percent to below $68 per barrel.
The S&P 500 has entered a technical correction, falling more than 10 percent since a high on April 23. The Dow industrials were on course to open below 10,000 after trading below that level on an intraday basis on Friday.
A report on the housing market gave little reason for optimism. Single-family home prices were unchanged in March from February, but fell in the first quarter on renewed price pressure as federal aid faded away, the Standard & Poor's/Case-Shiller home price indexes showed.
(Reporting by Edward Krudy; editing by Jeffrey Benkoe)