Fearsome drop on US stocks!

NEW YORK (CNNMoney) -- U.S. stocks were headed for another drop Tuesday, amid growing concerns that the eurozone debt crisis is spreading to Italy.
Dow Jones industrial average (INDU), S&P 500 (SPX) and Nasdaq (COMP) futures were lower ahead of the opening bell. Futures measure current index values against perceived future performance.

U.S. stocks sank broadly on Monday, as investors were spooked by worries that Europe's debt crisis could spread to Italy -- one of Europe's largest economies.

Manoj Ladwa, senior trader at ETX Capital, said contagion fears are likely to stay center stage for investors on Tuesday.

"That's the main concern for the markets," Ladwa said. "Exactly how far this crisis is going to spread."

The yield on 10-year Italian bonds continued to spike, as investors demand higher interest rates in exchange for holding the country's debt. On Tuesday, yields approached 6% -- an elevated premium over the German bund.

Ladwa said yields will rise even higher if the stress tests scheduled for European banks come back worse than expected, and the Italian 10-year bond could spike above 7% if the country's banks perform poorly.

Economy: Investors will get the U.S. trade balance figures for May in the morning. Economists surveyed by Briefing.com expect the U.S. posted a $44 billion trade deficit in May, slightly wider than the $43.7 billion deficit for April.
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In the afternoon, the Federal Reserve's will release the minutes from its Federal Open Market Committee meeting in June.

World markets: European stocks fell in morning trading. Britain's FTSE 100 shed 1.2%, the DAX in Germany retreated 1.8%, and France's CAC 40 stumbled 2.4%.

Asian markets ended the session sharply lower. The Shanghai Composite dropped 1.7%, the Hang Seng in Hong Kong tumbled 3.1% and Japan's Nikkei lost 1.4%.
Europe, Asia markets tumble on debt concerns

Companies: After the closing bell Monday, Alcoa (AA, Fortune 500) reported a larger than expected gain in second-quarter sales. The Dow component is the unofficial harbinger of earnings season, when public companies report earnings and sales data.

Currencies and commodities: The dollar strengthened against the euro and the British pound, but fell versus the Japanese yen.

Oil for August delivery slipped 97 cents to $94.18 a barrel.

Gold futures for August delivery fell $1.90 to $1,547.30 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury rose, pushing the yield down to 2.87% from 2.92% late Monday.