Stock futures tumble on global economic worries

[June 29, 2010]  NEW YORK (AP) -- Stock futures and interest rates tumbled Tuesday after fresh signs of a global economic slowdown spooked investors.

Asian markets tumbled overnight when Japanese data showed its country's recovery slowed and China's market was hurt by an initial public offering that pulled investors away from the rest of the market. European indexes opened sharply lower after Greek workers again walked out of their jobs to protest steep budget cuts.

Interest rates fell in the bond market as investors sought the safety of Treasurys. The yield on the 10-year note dropped to 2.98 percent, the first time it has fallen below 3 percent since April 2009. Its yield is used as a benchmark for many consumer loans and mortgages.

Falling yields are a sign that investors are willing to forgo potential big gains in stocks for more certain, but smaller profits in bonds.

Investors are worried that a global rebound is weakening. Those fears appear to have spread to consumers as well. A report due out Tuesday on consumer confidence is expected to show confidence fell in June after three straight months of gains.

Economists polled by Thomson Reuters forecast the Conference Board's consumer confidence index fell to 62.8 from 63.3 last month. The index needs to climb above 90 to indicate the economy is on solid footing. It is set to be released at 10 a.m. EDT.

Consumer confidence could be waning, in part, because there have been few signs that strong job growth is on the horizon. The monthly employment report due out Friday is expected to show the unemployment rate rose 0.1 percent to 9.8 percent in June.

Ahead of the opening bell, Dow Jones industrial average futures fell 103, or 1 percent, to 9,985. Standard & Poor's 500 index futures fell 12.20, or 1.1 percent, to 1,058.70, while Nasdaq 100 index futures dropped 26.50, or 1.4 percent, to 1,809.50.

A report that is expected to show home prices rose in April has failed to combat the concerns swirling around the market. The S&P/Case-Shiller home price index, which measures home prices in 20 large metropolitan areas, likely rose 3.4 percent compared with the year-ago period. That's better than the 2.3 percent jump in March.

Worries about Europe are again rattling the market. The euro, the common currency used by 16 European nations, fell to $1.2189. The currency has been seen as a proxy for confidence in Europe's economy following Greece's near bankruptcy and steep budget cuts around the continent to combat rising deficits. World markets have regularly dropped along with the euro in recent months.

Greek workers walked off their jobs as part of another nationwide strike to protest the austerity measures the government put in place to try and reduce debt. The austerity measures were a requirement for Greece to receive a bailout from other European Union members and the International Monetary Fund.

The new round of protests sparks fresh concerns about how well European countries will be able to stick to austerity plans in the face of public outcry against them. Investors have been worried for months that Europe's economy would grind to a halt and drag down the global economy with it.

The Japanese government reported Tuesday that export demand moderated and household spending dropped last month. Unemployment also rose unexpectedly, climbing for the third straight month.

Chinese shares tumbled as investors worried that an initial public offering for the Agricultural Bank of China would draw money away from other stocks.

The Shanghai composite index fell 4.3 percent to a 14-month low, while Japan's Nikkei stock average fell 1.3 percent. Britain's FTSE 100 fell 2.1 percent, Germany's DAX index dropped 2.3 percent, and France's CAC-40 fell 2.7 percent.

[Associated Press; By STEPHEN BERNARD]

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