U.S. Futures Tumble on Economic, Euro Fears

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U.S. stock futures plummeted in early trading on Monday evening following a steep global selloff as mounting fears over the condition of the world's largest economies and the escalating European sovereign debt crisis sent traders darting for safe-haven assets.

As of 9:25 p.m. ET, Dow Jones Industrial Average futures plummeted 240 points to 10,968, S&P 500 futures slid 27.9 points to 1,141 and Nasdaq 100 futures slumped 43.3 points to 2,121.

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European shares sustained steep losses on Monday, with the MSCI Europe Index, which tracks 16 developed European markets, plunging 4.2%. Germany's DAX index sustained some of the steepest losses, shedding 5.3%, while England's FTSE 100 dropped a more mild 3.6%.  In Asia, the Japanese Nikkei 225 traded lower by 1.4% in early trading on Tuesday on the heels of a 1.9% selloff.

Safe-haven assets such as gold have soared as a result of uncertainty.  The precious metal recently jumped $21.90, or 1.2%, to $1,899 a troy ounce -- topping the record settlement price struck in late August. The yield on the benchmark 10-year Treasury bond, meanwhile, fell to a record low of 1.92%, highlighting the demand for safe assets.

Wall Street is coming off of a steep, two-day losing streak, in which the blue chips have shed 373 points, or 3.2%. The U.S. has gotten a stream of data points that have painted a grim picture for the world's largest economy.  Indeed, the closely-watched monthly unemployment report released on Friday showed the economy added no new jobs, compared with expectations of a 75,000 net increase.

As a result, many investment banks have repeatedly pared down projections for economic expansion, and some have said a double dip recession is a distinct possibility. Goldman Sachs, for example, wrote a research note to clients over the weekend reiterating its call that the chances of a double dip recession are "about one in three."

The economic calendar is fairly light this week, however, the markets will receive a considerable amount of information from the Federal Reserve. The central bank's beige book, which provides anecdotal information from each of the Fed's districts, is slated for release on Wednesday.  Fed Chairman Ben Bernanke is also expected to give a speech on Thursday that will likely be watched closely on Wall Streets.

Market participants will be waiting to see if the Fed chief hints that the central bank will provide additional monetary easing at its two-day meeting that starts on September 21.  Bernanke, and several other Fed officials, have indicated that policymakers are considering ways to loosen monetary policy further in light of strengthening economic headwinds.  With short-term interest rates already at the lowest possible level, the Fed has had to develop unprecedented methods to stimulate the economy and buoy the financial system.

There have also been continuing concerns of Europe's sovereign debt crisis.  Several euro zone countries such as Greece and Italy have high levels of public debt as compared to total economic output, prompting concerns over how they will be able to pay back their debt, especially considering a weaker global economic situation.  In fact, Greece has already needed two rounds of emergency bailouts.

Yields on the debt euro zone countries that are perceived to be weaker such as Greece, Spain and Italy have climbed markedly, indicating traders are pricing in a higher level of risk.  In turn, this has pressured European banks that hold sovereign debt of these countries as assets.

In energy markets, crude fell $2.50, or $2.9%, to $83.95 a barrel.  Wholesale RBOB gasoline slipped 5 cents, or 1.8%, to $2.79 a barrel.

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