Stock futures fall, point to lower opening

[May 24, 2010]  NEW YORK (AP) -- Stocks are set to resume their slide Monday as investors remain jittery about the strength of Europe's financial stability. Futures are sharply lower.

The expected drop at the open comes after a tumultuous week that saw major U.S. indexes post their biggest one-day losses of the year on Thursday only to rebound and rise Friday. Still, major indexes have been hit hard in recent weeks as investors continue to worry about European sovereign debt problems.

Major European indexes all fell Monday following a bailout over the weekend of a regional bank in Spain, one of the countries already dealing with ballooning deficits. The Bank of Spain stepped in to bail out Cajasur after it failed to complete a merger. It was only the second time Spain's central bank stepped in to bail out a regional lender.

The euro fell against the dollar, dropping to $1.2367. In recent weeks as the debt crisis has grown in Europe, the euro has become a proxy for how concerned investors are about the continent's economy. The euro hit a four-year low on Wednesday.

There is uncertainty about whether countries like Greece, Spain and Portugal will be able to contain mounting debt through steep spending cuts. And, investors are also worried that those budget cuts will upend an economic recovery in Europe and slow any rebound worldwide.

Ahead of the opening bell, Dow Jones industrial average futures fell 92, or 0.9 percent, to 10,069. Standard & Poor's 500 index futures fell 12.90, or 1.2 percent, to 1,071.70, while Nasdaq 100 index futures fell 18.50, or 1 percent, to 1,800.75.

Despite Friday's rally that saw the Dow jump 125 points, major indexes were still sharply lower last week. Stocks are now trading at about the levels seen in early February and are down about 2 percent for the year.

Major indexes are down about 10 percent from their highs of the year, set in late April. That size drop is known as a "correction." This is the first such retreat since markets hit a 12-year low in March 2009.

Meanwhile, bond prices rose Monday as investors again sought the safety of U.S. Treasurys. Investors have been flocking to the perceived safety of government bonds and other investments like gold as they sell off riskier assets like stocks and oil.

The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.19 percent from 3.24 percent late Friday.

Gold rose $8.8 to $1,184.90 an ounce. Benchmark crude fell 20 cents to $69.84 a barrel in electronic trading on the New York Mercantile Exchange.

Overseas, Britain's FTSE 100 fell 0.3 percent, Germany's DAX index dropped 0.9 percent, and France's CAC-40 fell 0.3 percent.

[Associated Press; By STEPHEN BERNARD]

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.