U.S. stock index futures pointed to a lower opening for Wall Street as a plan to pour $14 billion into the cash-strapped auto industry failed in the Senate and worries heightened over the banking sector.
The major indexes were set to drop about 3 percent each, though they were off their morning lows.
Traders were anticipating calamity for the Big Three Detroit automakers, with General Motors shares plunging more than 31 percent and Ford off nearly 20 percent in premarket trading.
Asian stocks plummeted, with the Nikkei closing down more than 5.5 percent, while European markets were deep in the red in morning trading.
More bad news about the banking sector also hit the market from both sides of the Atlantic.
The negative headlines started Thursday when JPMorgan Chase CEO Jamie Dimon told CNBC that the banking giant has had a "terrible" November and December, sending its stock down 10 percent and prompting a selloff in financial shares.
Also on Thursday, Bank of America said its planned job cuts may grow to 35,000 over three years after it completes its purchase of Merrill Lynch.
Bank of America and JPMorgan both dropped about 4 percent and Merrilly fell more than 3 percent premarket.
In Europe, UK bank HBOS, which is being taken over by Lloyds TSB, said bad debts and other charges jumped to 8 billion pounds ($11.9 billion) this year as corporate and home loans soured.
Italian bank UniCredit, the country's second-largest, moved to bolster a key capital ratio by selling shares and amending a put/call accord on unit Bank Pekao shares.
And as officials wrangle about what needs to be done, the survival of the U.S. economy depends on helping homeowners, John Bogle, The Vanguard Group founder and former CEO, told CNBC.
Rewriting the terms, the maturities, the interest rates and payments on mortgages should be part of any homeowner bailout, Bogle said.
On the economic front, wholesale inflation data will be released at 8:30 am New York time, and analysts surveyed by Briefing.com expect producer prices to have fallen by 2.1 percent in November versus October's 2.8 percent fall.
Retail sales data for November will also be released at the same time.
And Bernard Madoff, the former chairman of the Nasdaq Stock Market, was arrested and charged Thursday with running a $50 billion Ponzi scheme.