US stock futures drop on global economy worries
NEW YORK (AP) - Stock futures fell sharply Monday amid fresh fears about the global economy and ahead of the start of earnings season.
Concern about potential government debt defaults have spread beyond Greece, Ireland and Portugal to Italy and Spain. Greece is about to receive a second rescue package that will bring the country back from the brink of default.
But investors are now focusing on the prospect that the crisis could spill over into much-larger Italy and Spain. Italian banks UniCredit SpA and Intesa fell sharply Friday, sparking fears that even aid from international lenders may not be enough to stop a broad deterioration of the European economy.
"What the European Union is trying to do is keep the problem contained at a sovereign level and not have the infection spread to the banking system," said Jack Ablin, chief investment officer at Harris Private Bank. "To see a bank drop that much, that fast suggests there may be a breach."
New concerns also arose about the U.S. economy over the weekend. Setbacks in budget talks between Republicans and Democrats raised the possibility that the U.S. might fail to pay its debt for the first time in history.
A government report Friday saying the economy created far fewer jobs than expected in June compounded fears that the U.S. economy was in even worse shape than previously thought.
Ahead of the opening bell, Dow Jones industrial average fell 117 points, or 0.9 percent, to 12,498. Standard & Poor's 500 futures fell 17, or 1.2 percent, to 1,324. Nasdaq 100 futures fell 28, or 1.2 percent, to 2,380.
Aluminum maker Alcoa announces its second-quarter results after the trading day ends, marking the unofficial beginning of U.S. earnings season.
Aluminum is used in everything from airplanes to beer cans, so the company's results offer insight into how the broader U.S. economy is doing.
Insurance giant AIG fell 1.2 percent in premarket trading after announcing it would fire at least one of the bankers it used for its recent public stock offering before it sells more stock later this year.