Futures Plummet Amid Italian Debt Worries

Futures declined sharply Wednesday as a spike in Italian bond yields to a euro era record spooked investors and amid uncertainty whether a new government in Italy can tackle the nation's debt crisis.

Italian borrowing costs reached a breaking point, hitting 7.5 percent, a level that previously drove other euro zone nations such as Greece and Portugal out of credit markets and forced those countries to seek bailouts from external assistance from the EU and IMF. However, most strategists worry that Italy is too large to bail out.

Stocks closed higher in the previous session after Italian Prime Minister Silvio Berlusconi announced he would resign once a series of austerity measures had been put in place.

Elsewhere a plan for former European Central Bank vice-president Lucas Papademos to lead a Greek government of national unity also ran run into trouble, according to sources, prolonging a political hiatus as that country heads toward bankruptcy.

Christine Lagarde, head of the IMF, warned Europe's debt crisis risked plunging the global economy into a "lost decade,"and said it was up to rich nations to shoulder the burden of restoring growth and confidence.

On the earnings front, GM posted a better-than-expected profitas the automaker gained market share in North American and Asian markets. However, shares tumbled with the broader market.

Macy's reported results that beat estimates and also raised its full-year outlook.

HSBC slumped after the financial giant cited a "very challenging" outlookfor the global economy and posted a 36 percent plunge in underlying profits, due to lower investment banking income and a gain in bad debts in the U.S.

Cisco and Green Mountain are scheduled to report earnings after-the-bell tonight.

Federal Reserve Chairman Ben Bernanke gives a welcome and opening remarks at 10:30am before the Small Business and Entrepreneurship During an Economic Recovery conference.

On the economic front, the Commerce Department releases wholesale inventories for September at 10 am ET. Economists polled by Reuters forecast inventories to rise 0.5 percent versus a 0.4 percent increase in August.

Weekly mortgage applications jumped last week, according to the Mortgage Bankers Association, thanks to increased refinancing demand as interest rates dropped.

Meanwhile, China's annual inflation rate fell sharply in October to 5.5 percent in a further pullback from July's three-year peak, giving Beijing more room to fine-tune policy to help an economy feeling the chill of a global slowdown.

—Follow JeeYeon Park on Twitter: twitter.com/JeeYeonParkCNBC

On Tap This Week:

WEDNESDAY: Wholesale trade, oil inventories, 10-yr note auction, AT&T/Sprint back in court, Citigroup settlement hearing; Earnings from Cisco, Green Mountain
THURSDAY: International trade, jobless claims, import & export prices, 30-yr bond auction, MF Global bankruptcy proceedings; Earnings from Kohl's, Disney, Nordstrom, Nvidia
FRIDAY: US Holiday—Veteran's Day. Markets open, banks closed. Consumer sentiment, French short sale ban ends

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