U.S. stock futures tumble on EU debt fears; Dow drops 0.95%

Forex Pros - U.S. stock futures dropped sharply on Monday, tracking global equities lower as mounting fears over the euro zone's peripheral debt crisis weighed on market sentiment.

Dow Jones Industrial Average futures pointed a drop of 0.95%, the S&P 500 futures sank 0.98%, while Nasdaq 100 futures tumbled 1%.

Fitch Ratings cut Greece's debt ratings by three notches on Friday, while Standard & Poor's cut its outlook for Italy to negative from stable on Saturday. Meanwhile, Spain's ruling Socialist party lost to conservatives in elections on Sunday, raising concerns about how the country will address its debt problems.

Shares in the financial sector declined ahead of the open, tracking losses from their European counterparts. Bank of America saw shares slide 1.5%, Citigroup declined 1.4%, while U.S. listed shares of Deutsche Bank dropped 2%.

Meanwhile, airliners were hit by news of a new volcanic eruption in Iceland, threatening to disrupt trans-Atlantic air travel. The world's largest airliner United Continental saw shares decline 1.4%, while shares in US Airways fell 1.1%.

Consumer electronics giant Sony saw shares tumble 3.3% after it projected a net loss of USD3.19 billion in the 2011 fiscal year to reflect damages of the earthquake and tsunami in Japan. In February, Sony had forecast a profit of USD857 million for the 2011 fiscal year.

Apple saw shares slip 1.1% after an explosion at a Foxconn International plant in southwest China on Sunday killed three people. Foxconn is a key manufacturing partner of Apple.

On the upside, shares in Krispy Kreme Doughnuts surged 10.5% after reporting that its first quarter net profit more than doubled to USD9.2 million. Revenue for the quarter rose 14% to USD104.6 million, beating expectations for revenue of USD96.8 million.

Campbell Soup saw shares climb 0.5% after it said fiscal third quarter sales rose 1% to USD1.81 billion, following sharp price cutting in the first half of the year.

Meanwhile, shares in raw material producers, such as Alcoa and Freeport McMoran Copper & Gold could be active as commodity prices declined, pressured by a broadly stronger U.S. dollar.

Across the Atlantic, European stock markets posted steep losses amid fears the region's debt crisis could spread to Spain and Italy. The EURO STOXX 50 tumbled 1.85%, France's CAC 40 sank 1.9%, Germany's DAX plunged 1.8%, while Britain's FTSE 100 dropped 1.65%.

During the Asian trading session, Japan's Nikkei 225 Index closed 1.5% lower, while Hong Kong's Hang Seng Index lost 2.1%, after preliminary data showed weakening growth in China's manufacturing sector, while shares in Tokyo Electric Power Company tumbled after posting record losses.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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