Stock futures retreat on continued worries about a potential slowdown in global growth

Stock futures plummet, market set for lower open

NEW YORK — The Dow Jones industrials looked to plunge below 10,000 Tuesday as investors worried about a global economic slowdown and tensions between North and South Korea turned away from stocks.

Dow futures fell 222, or 2.1 percent, to 9,821. The Dow average closed at 10,066 on Monday and has fallen 1,138 points, or more than 10 percent, from its recent high of 11,205, reached April 26.

With investors flocking out of stocks, oil and the euro, U.S. Treasury prices again surged. The perceived safety of U.S. government bonds pushed yields and interest rates lower. The benchmark 10-year note’s yield fell to its lowest level since April 2009.

World stock market were also sharply lower.

“Market participants feel like they’re walking on eggshells,” said Oliver Pursche, executive vice president at Gary Goldberg Financial Services in Suffern, N.Y. “Every small piece of potentially bad news is being exaggerated and mentally being fast-forwarded to the worst-case scenario.”

European Union leaders warned Tuesday that the continent’s economy would stagnate unless governments make major reforms to promote growth. The problem is, though, that large debts in some countries make it difficult to implement stimulus measures to rally economies.

The euro approached a four-year low, which it set last week. The euro dropped to $1.2192, bringing it within a penny of the low of $1.2146 it touched last week.

Traders have been rapidly selling the euro in recent weeks because of uneasiness over whether steep budget cuts in countries like Greece, Spain and Portugal will drag down an economic recovery on the continent. Italy was set to become the latest European nation to announce spending cuts to reduce its deficit.

Markets were also hurt by reports that North Korean leader Kim Jong Il ordered his military to combat alert because of rising tensions on the Korean peninsula. Major indexes in Japan and Hong Kong fell more than 3 percent.

Standard & Poor’s 500 index futures fell 27.40, or 2.6 percent, to 1,043.50, while Nasdaq 100 index futures fell 42.25, or 2.3 percent, to 1,770.25.

The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.11 percent from 3.20 percent late Monday. It fell as low as 3.07 percent, its lowest level since April 2009.

The yield on the 30-year bond briefly fell below 4 percent for the first time since October, before rising slightly. It is down to 4.01 percent from 4.08 percent late Monday.

Britain’s FTSE 100 dropped 2.9 percent, Germany’s DAX index tumbled 2.9 percent, and France’s CAC-40 plummeted 3.7 percent. Japan’s Nikkei stock average fell 3.1 percent.

Tuesday’s expected sell-off follows a sharp, late-session drop Monday. The Dow lost 80 points in the last 15 minutes of trading Monday to close down nearly 127.

Investors were also concerned about a bill in Congress that will overhaul financial regulation. The Senate and House are reconciling their separate versions of the proposed reform.

Investors shrugged off a better-than-expected report on existing home sales from April. Such upbeat economic reports had helped push stocks consistently higher earlier in the year.

Oil fell $2.75 to $67.45 a barrel in electronic trading on the New York Mercantile Exchange.