Futures tumble on rising Italy worry

By Chuck Mikolajczak

Italian borrowing costs reached a breaking point, hitting 7.5 percent as Prime Minister Silvio Berlusconi's promise to resign failed to raise optimism about the country's ability to deliver on long-promised economic reforms.

Italy has replaced Greece at the center of the euro zone debt crisis and is teetering on the cusp of requiring a bailout that many say Europe cannot afford to give.

Portugal and Ireland were forced to seek bailouts when their borrowing costs reached similar levels.

By midday, European stocks were lower by 2.1 percent after an early rally that had been ignited by Berlusconi's announcement to step down.

S&P 500 futures slumped 28.5 points and were 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 lost 213 points while Nasdaq 100 futures dropped 41.25 points.

Adobe Systems Inc fell 10.4 percent to $27.25 in light premarket trade after the software maker said it plans to lay off more than 7 percent of its workforce.

After the closing bell, Cisco Systems Inc, the maker of Internet networking gear, will report quarterly results.

On the economic front, the Commerce Department releases wholesale inventories for September at 10 a.m. EST (1500 GMT). Economists forecast inventories to rise 0.5 percent versus a 0.4 percent increase in August.

Federal Reserve Chairman Ben Bernanke will speak at a small business and entrepreneurship conference at 9:30 a.m. EST (1430 GMT).

(Reporting by Chuck Mikolajczak; editing by Jeffrey Benkoe)