By Rodrigo Campos
On Monday, U.S. stocks racked up their best month in 20 years in October.
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Greek Premier George Papandreou said he will put Greece's bailout deal through a referendum, potentially undoing a long-awaited agreement struck just last week and sending European stocks down 4.4 percent. The region's bank shares fell 7.9 percent to $16.25.
Greek opposition parties said the referendum was putting Greece's European Union membership at risk and instead called for a snap election.
U.S. bank shares were expected to follow European lenders lower. The Financial Select Sector SPDR fell 4 percent with Bank of America down 5.9 percent and Morgan Stanley down about 7 percent.
"The market did not see this Greek referendum coming, which is potentially a killer and could knock the wheels off the bus of the whole (European rescue) plan," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.
"If the Greek people were to vote for this it would give it a lot more weight," he said. "It's just the uncertainty between now and then what puts the rally in question."
S&P 500 futures dropped 38.3 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 242 points and Nasdaq 100 futures slid 58.25 points.
S&P 500 futures fell below their 14-day moving average for the first time since October 6 early Tuesday, pointing to a possible shift in short-term momentum. The benchmark index is set to open against strong support near 1,220.
Most Asian stock markets, including Hong Kong's, fell after data showed factory activity in the region's export powerhouses slowed to near three-year troughs in October on lower European demand, reinforcing fears the euro zone's debt troubles were sapping global growth.
In a move that could further weigh on commodity prices and risky assets, Japan vowed to step into foreign exchange markets again to curb excessive speculation. The government sold a record 7.7 trillion yen ($98.7 billion) on Monday to curb the yen's strength, which is hurting its export-based economy.
The U.S. dollar index rose 1.9 percent. U.S. oil futures dropped 3.8 percent and copper prices fell 4.1 percent.
In the United States, the ISM Manufacturing Index is expected to edge up to 52.0 in October from 51.6, based on a Reuters poll. The data is due at 10 a.m. EDT (1400 GMT).
The Federal Open Market Committee kicks off its two-day policy-setting meeting later Tuesday.
(Reporting by Rodrigo Campos; editing by Jeffrey Benkoe)