Stock market futures plunged Friday after the government reported job creation in May fell well short of expectations.
The Bureau of Labor Statistics said the economy created just 69,000 new jobs in May and the unemployment rate rose to 8.2 percent, sending futures well lower towards a 2 percent decrease at the open.
Futures already had been under pressure from bad economic news out of China and India, and the jobs report contributed to more fear, coupled with speculation among traders about what role the Federal Reserve might take in terms of quantitative easing.
All of the bad news comes as May marks the worst month for the stock market in two years.
Whether the selloff continues through the summer "really depends on the government," said Doug Roberts, managing partner at Channel Capital Research. "If they start making news about QE3, than you can start to see this (selloff) is going to be relatively short-lived."
Construction spending data for April is also released on Friday at 10 a.m. New York time, with analysts on briefing com predicting a flat month. At the same time the ISM manufacturing index for May is released. Economists told Reuters they expected a reading of 53.9 versus 54.8 in April.
The Commerce Department releases April personal income and consumption data at 8:30 a.m. in New York. Economists said they expected a 0.3 percent rise in income and a 0.3 percent increase in spending.In March, income was up 0.4 percent and spending rose 0.3 percent.
Elsewhere, China's slowdown worsened in Mayas its factories saw a further deterioration in demand at home and abroad, dealing a new blow to a global economy struggling with a sharp downturn in Europe and a faltering recovery in the bUnited States.
The darkening outlook was underlined by data showing the fourth monthly decline this year in exports from South Korea, the first major economy to report May numbers, as shipments to the United States, Europe and China all fell.
Brent crude oil fell to its lowest since October 2011 as the weaker manufacturing activity data raised concerns of a slowdown in demand.
In corporate news, Exxon Mobil plans to build a multi-billion dollar chemical plant in Texas to take advantage of cheap North American shale gas, according to a U.S. environmental filing seen by Reuters.
Google accused Microsoft and Nokia of conspiring to use their patents against smartphone industry rivals, and said it had filed a formal complaint with the European Commission.
European shares fell 0.4 percent as lingering fears over the debt-ridden economies of Greece and Spain, which in May pushed major markets to their worst monthly loss since last August, weighed on investors' minds.
Spain was dealt a double blow on Thursdayafter it emerged that almost 100 billion euros ($123.25 billion) in capital had left the country in the first three months of the year and the head of the European Central Bank (ECB) lambasted its handling of Bankia, the troubled Spanish lender.
Data published by Spain’s central bank showed 97 billion euros had been pulled out in the first quarter – around a 10th of the country’s gross domestic product – as concerns mounted over Madrid’s ability to contain its twin economic and financial crises, which have forced government borrowing costs to euro-era highs.
The data appeared to corroborate earlier assessments from economists that foreign investors were selling Spanish assets, while Spanish banks were increasing their holdings of domestic bonds, helped by cash accessed through the ECB’s three-year liquidity operations.
Meanwhile, Ireland's referendum on the European Union's new fiscal treatywas likely to pass by a margin of more than three to two, saving Europe a major headache, two government sources told Reuters ahead of the counting of votes on Friday.