Futures Skid After Dismal Retail Sales

Futures were lower after the drop in retail sales came in about double what was expected and as earnings worries escalated.

Retail sales dropped by 2.7 percent in December, soaring past the 1.4-percent decline expected. November was also revised to show a sharper decline than previously expected.

Meanwhile, import and export prices fell for a fifth straight month in December as costs for oil and even many nonpetroleum products declined. However, the decline was smaller than expected.

Still to come, a report on November business inventories is due out at 10 a.m. ET and the Federal Reserve issues its beige-book report this afternoon.

The Dow Jones Industrial Average has already racked up five consecutive negative trading sessions, losing over 7 percent during the decline. The S&P 500 and Nasdaq managed to scrape a gain in the last session, but volatility and uncertainty remained.

“People are confused,” Jared Levy, senior market specialist at FME, LLC told CNBC. But the “slightest glimmer of hope” tends to bring buying back into the market, he added.

Whether investors get a glimmer of hope from the earnings session or the economic data remains to be seen.

But the early indications for retail weren't pretty.

Upscale retailer Tiffany reported its holiday sales fell 21 percent from 2007, attributing the decline to consumer caution amid the recession. The news sent Tiffany shares down 3.6 percent premarket.

In corporate news, the future of Citigroup CEO Vikram Pandit grew more uncertain, despite the recent backing of the bank’s board. The decision to shed brokerage unit Smith Barney, coupled with an about face over the company’s ‘financial supermarket’ strategy, has raised doubts in Wall Street.

Citi shares were off 1.2 percent in premarket trading.

A slew of big banking names saw shares move sharply lower prior to the market open.

HSBC dropped 6.4 percent amid worries that Europe's biggest bank may have to raise $30 billion in capital. For the year, the company said it expected to post a loss of 3.9 billion euros, or $5.14 billion.

Bank of America lost 1.4 percent after analyst Richard Bove of Ladenburg Thalman cut both his 2008 and 2009 forecasts for the company, saying it faced large losses from higher net charge-offs, loan reserves and trading losses.

And Deutsche Bank tumbled more than 10 percent premarket after it said it expects to post a $6.4 billion quarterly loss because of weakness in its credit rating and other issues.

On the plus side, Dow component Alcoa's shares rebounded a bit premarket as bargain hunters looked to step in and capitalize after the aluminum giant's shares fell earlier this week following an earnings report that missed estimates. Alcoa shares gained 2.6 percent premarket.

Meanwhile, Chrysleris reportedly in talks to offload assets as pressure for the automaker to restructure mounts. Renault-Nissan and auto-supplier Magna are the buyers lined up, according to people with knowledge of the discussions, though Renault-Nissan denied the talks.

Numerous criminal cases were dominating the financial landscape with UBS banker Raoul Weil formally declared a fugitive by the U.S. and investment manager turned fugitive Marcus Schrenker found, having attempted suicide, after a three-day run from the authorities. The world’s biggest listed hedge fund, Man Group, will take legal action with its investors over exposure to the alleged fraud by U.S. financier Bernard Madoff, Chief Executive Peter Clarke told Reuters in an interview.

Treasury Secretary nominee Timothy Geithner is facing questioning on the immigration status of a former housekeeper.