US STOCKS-Futures tumble on euro-zone, Korea worries

* Global stocks drop

* North Korea threatens military action

* Fears mount over euro-zone banking system

* Futures off: Dow 213 pts, S&P 26.2 pts, Nasdaq 41 pts

* For up-to-the-minute market news see [STXNEWS/US]

By Edward Krudy

NEW YORK, May 25 (BestGrowthStock) – U.S. stock index futures
pointed to a fall of 2 percent at the open on Tuesday, tracking
a sell-off in global equities, on worries over Europe’s banking
sector and as North Korea ramped up rhetoric against the
South.

World stocks slid, with Japan’s Nikkei closing down 3.1
percent and European shares dropping nearly 3 percent on
renewed worries over the euro-zone banking sector after the
Bank of Spain rescued a local lender over the weekend.

Three-month dollar Libor rates rose to their highest level
since July as banks became warier of lending to European
institutions. A higher interbank rate can crimp bank profits.

The euro neared a four-year low versus the dollar, and
safe-haven Treasuries rallied. For details, see
[ID:nLDE64O0EP]

“It is pretty clear that the situation in Greece really has
exposed sovereign debt problems everywhere,” said Bruce
Bittles, chief investment strategist at Robert W. Baird & Co in
Nashville. “The problems is that if this is a waterfall
decline, then of course most of the damage in a waterfall comes
near the end.”

North Korea’s threat of military action against the South
helped send local shares to a 15-week closing low as the
government in Seoul convened an emergency session. The threats
followed the sinking of a South Korean warship, allegedly by
the North, in March. [ID:nSGE64O03B]

S&P 500 futures (SPc1: ) fell 26.2 points and were below fair
value, a formula that evaluates pricing by taking into account
interest rates, dividends and time to expiration on the
contract. Dow Jones industrial average futures (DJc1: ) sank 213
points, and Nasdaq 100 futures (NDc1: ) lost 41 points.

Some big banks and industrial stocks fell in premarket
trading on fears that Europe’s debt crisis, which originated in
Greece, might derail a global economic recovery.

Bank of America Corp (BAC.N: ) fell 3.1 percent to $14.92,
and Alcoa Inc (AA.N: ) dropped 4.3 percent to $10.61. Chevron
Corp (CVX.N: ) was off 2.3 percent to $71.75, as oil futures were
caught up in the commodities sell-off, falling nearly 4 percent
to below $68 per barrel.

The S&P 500 has entered a technical correction, falling
more than 10 percent since a high on April 23. The Dow
industrials were on course to open below 10,000 after trading
below that level on an intraday basis on Friday.

A report on the housing market gave little reason for
optimism. Single-family home prices were unchanged in March
from February, but fell in the first quarter on renewed price
pressure as federal aid faded away, the Standard &
Poor’s/Case-Shiller home price indexes showed. [ID:nNLLPGE64B]

Investment Basics

(Reporting by Edward Krudy; editing by Jeffrey Benkoe)

US STOCKS-Futures tumble on euro-zone, Korea worries