U.S. stock futures plunge after downbeat data; Europe's equities fall with Greece in focus

On Monday U.S. stock futures added to losses after soft manufacturing data. They were already pressured by losses in European equities which plunged on Greek worries.

Manufacturing production in the U.S. declined by a seasonally adjusted 0.2% in May, compared to forecasts for a 0.3% increase and following a gain of 0.1% in April. The Federal Reserve said that industrial production dipped by a seasonally adjusted 0.2% last month, disappointing expectations for a gain of 0.3%. Industrial production fell by 0.5% in April, whose figure was revised down from a previously reported drop of 0.3%.

The report also showed that the capacity utilization rate, a measure of how fully firms are using their resources, declined to 78.1% in May from 78.3% in April, compared to expectations for a reading of 78.3%.

The S&P 500 opened 19 points, or 0.9%, lower at 2,075. The Dow Jones Industrial Average dropped 190 points, or 1.1%, to 17,712. The Nasdaq Composite began the day down 53 points, or 1.1% to 4,996.

The Stoxx Europe 600 decline weighed on stock futures. European stocks fell more than 1%, as Greece’s Athens Composite tumbled 5% and the yield on Greece’s 10-year bond hit 12%, a level not seen since April. 

National Bank of Greece SA tumbled 14% and Alpha Bank AE 8%; banks from Spain and Portugal also suffered with a nearly 5% drop for Banco Comercial Português SA and Banco Santander SA was closing in on a 2.7% fall.

The yield on the 10-year Greek bond pushed above 12% in Europe’s morning, on track for its highest close since late April. It was up 90 basis points at 12.72%, according to electronic trading platform Tradeweb.

The yield on 2-year bonds surged 3.9 percentage points to 28.66%, says MarketWatch.

Markets seem to start panicking after a breakdown in discussions between Greece and its creditors.

“The difficulty investors face is that the market really has little idea of just how much a Greek exit would hurt and how much exposure different companies and sectors have to such an event. The collapse of Lehman’s demonstrated the unforeseen interdependence across multiple markets and counterparties, and the danger is that a Greek exit could have a similar domino effect,” Rebecca O’Keeffe, head of investment at stockbroker Interactive Investor, said to clients on Monday.