Stocks were set for a lower open on Monday as worries about the euro-zone debt crisis increased after Standard & Poor's cut Italy's rating outlook and Spain's ruling Socialists suffered a setback in elections.
S&P cut its rating outlook for Italy to negative from stable, citing weak growth prospects and increased risks from a mountain of debt.
The cut comes on the heels of a downgrade of Greece's credit rating by Fitch Ratings on Friday.
Greek Prime Minister George Papandreou discussed new emergency measures with his cabinet on Monday to cut the deficit, keen to convince lenders Athens can deal with a debt crisis without a restructuring.
Adding to the worries, Spain's Socialists, reeling from losses in local elections, now face a balancing act between voter anger over sky-high unemployment and investor demands for strict austerity measures.
The trend is lower, for very good reason -- concern over demand, concern over credit status globally, said Peter Kenny, managing director at Knight Capital in Jersey City, New Jersey.
There is no shortage of challenges for the market and good reason for pause. We've had a great 2-year run and it would be absolutely indefensible for institutions to not be locking in some gains.
The political and economic climate in Europe sent the euro to a two-month low versus the dollar <.DXY>, which dented commodity prices in turn. U.S. crude oil futures lost 3.3 percent.
S&P 500 futures fell 11.7 points and were well below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration of the contract. Dow Jones industrial average futures tumbled 97 points while Nasdaq 100 futures fell 25 points.
In what could be another blow to investor confidence, a powerful U.S. Republican lawmaker is investigating possible insider trading at SAC Capital Advisors LLP, highlighting increased public scrutiny of potential wrongdoing by hedge funds.
Sony Corp <6758.T>
Campbell Soup Co
(Reporting by Chuck Mikolajczak; Editing by Kenneth Barry)