Futures Plunge as Japan Nuclear Crisis Weighs

U.S. stock index futures pointed to very large declines Tuesday, following Asian and European markets lower, as the worsening nuclear crisis was bringing sellers out in droves.

The Dow and the S&P 500 indices held losses of more than 2 percent after news that import prices rose 1.4 percent, the fifth monthly gain, amid rising oil prices, according to the U.S. Labor Department. Economists surveyed by Reuters had expected import prices to rise 0.9 percent. Nasdaq futures fell 2.5 percent.

Also, the New York Fed's "Empire State" general business conditions index rose more than expected to 17.5, a nine-month high, from 15.43 the month before, according to the New York Federal Reserve.

Tokyo’s stock market plunged more than 14 percent at one point Tuesday after the quake-hit Fukushima nuclear power plant was hit by two explosions. A significant rise in radioactive levels added to the anxiety over last week’s disaster, with warnings that winds with radiation could reach Tokyo later in the day.

Japan’s economics minister tried to calm investors at a press conference Tuesday, saying there was no reason to close Tokyo markets. (Click here for more news on the disaster in Japan).

The uncertainty surrounding the nuclear crisis was making investors particularly risk-averse Tuesday, Michael Taylor, senior economist at Lombard Street Research, told CNBC.

“Like the crisis in the Middle East, it’s another one of those issues that could hit the global economy. Japan is still the world’s third-largest economy,” he said.

Utilities and stocks active in the nuclear sector were down sharply in morning trade in Europe. Shares of Areva, the world’s largest maker of nuclear reactors, fell 10 percent Monday and were down again Tuesday.

Luxury goods also fell, with Burberry down more than four percent as traders anticipate a drop in demand for the sector’s products.

Tuesday’s Federal Reserve meeting will attract less attention than usual as the crisis in Japan deepens. The Fed will release a statement at 2:15 p.m. that will give investors an indication of the Fed's latest views on its economic stimulus program, known as quantitative easing.

U.S. home-builder sentiment data is due at 10 a.m. The National Association of Home Builders/Wells Fargo Housing Market Index is expected to rise to 17 in March from last month's 16, a Briefing.com poll showed.

In company news, KKR

KKR loading...

Quote  |  Chart  |  News  |  Profile

[KKR  Loading...      ()   ] holds an investor day for the first time ever, starting at 8 am.

And Nasdaq is moving closer to a hostile bid for NYSE Euronext

NYX loading...

Quote  |  Chart  |  News  |  Profile

[NYX  Loading...      ()   ], which could come as early as Tuesday, sources close to the matter told CNBC.

On Tap Next Week:

TUESDAY: Credit card default rates, Empire state manufacturing survey, import & export prices, housing market index, and FOMC meeting announcement.
WEDNESDAY: Mortgage applications, housing starts, producer price index, current account, and oil inventories.
THURSDAY: Consumer price index, jobless claims, industrial production, leading indicators, Philadelphia Fed survey, natural gas inventories, money supply; before-the-bell earnings from FedEx and Lululemon; after-the-bell earnings from Nike.
FRIDAY: Quadruple witching; before-the-bell earnings from Allianz.

More on CNBC.com

• Scenes from Japan's Earthquake and Tsunami
• The World's 15 Biggest Oil Producers
• Towns That Time Forgot