MADRID (MarketWatch) -- Wall Street was bracing for a volatile day on Tuesday, with stock futures pitching lower as a renewed plunge in oil prices and a sharp rise in Russian interest rates roiled financial markets.
Erasing a gain of 0.5%, futures for the S&P 500 index (SPH5) shed 10.3 points, or 0.5%, to 1,972.90, while those for the Dow industrials (DJH5) did the same, erasing a 0.5% lead to slide 77 points, or 0.4%, to 17,046. Futures for the Nasdaq-100 index (NDH5) tumbled 24.75 points, or 0.6%, to 4,135.
Meanwhile, light crude for January delivery(CLF5) skidded 3% to $54.23 a barrel.
Overseas markets also will be hard to ignore. Russia's main stock index slumped 14% after the country's central bank hiked interest rates to 17% from 10.5% late Monday, in a bid to stem the ruble's decline. Sellers dug into the Russian currency (USDRUB) after a brief respite and the pair shot past 73 rubles.
Russia contributes just a small slice to global growth, but the situation still has some worried. "I think when a central bank decides to trade financial stability for a recession and fails within 12 hours, that is pretty serious," said Wouter Sturkenboom, strategist at Russell Investments in London.
"The real risk is the indirect financial exposure running through the banking system, affecting everything and everyone holding Russia paper," he said.
Manufacturing activity in China contracted this month for the first time since May, according to HSBC's preliminary monthly Purchasing Managers Index, released Tuesday. That data helped drive January Brent crude below $60 a barrel, to levels not seen since July 2009.
Data showing improvement in eurozone private-sector activity initially provided a thin layer of stabilization for oil and European stocks , though those gains didn't last. Data readings for Germany were mixed, though a ZEW survey showed financial experts are more confident about Germany's prospects than expected.
What will the Fed say? Just a couple of items on the data calendar for Tuesday: Housing starts for November and the Markit flash U.S. purchasing managers index are due at 8:30 a.m. Eastern Time and 9:45 a.m. Eastern, respectively.
Given the recent turmoil in markets, questions hang over what comments the Federal Open Market Committee will make after its meeting on Wednesday. "They will take note of the oil price, and what it means for the U.S. economy and inflation, but will be cautious not to be reactive to financial markets," predicted Sturkenboom.
Sturkenboom added the Federal Reserve's use of "considerable time" to describe when a rate hike can be expected is sure to go, with most in the market convinced of that.
Stocks in focus:Boeing Co.(BA) shares rose 2.7% in premarket after the aerospace company said its board lifted the quarterly dividend by 25%.
Shares of Talisman Energy Inc.(TLM) shot up 47% after Spain's Repsol SA said it would buy the Canadian energy company in a deal worth $8.3 billion plus debt.
Whirlpool Corp.(WHR) could be another gainer after the appliance maker adjusted its 2014 outlook and provided an earnings outlook for 2015.
Along with a slide in Russian assets and the ruble, exchange-traded funds related to the country were sinking. Direxion Daily Russian Bull 3x Shares(RUSL) slumped 21%, and Market Vectors Russia ETF fund(RSX) fell 8%.
Global turmoil: Losses around the globe mounted as oil fell and Russia rattled investors. Stocks in Dubai slid 7%, while in Qatar stocks fell 3.7%, with those countries most vulnerable to sagging oil prices. Risk-averse investors continued to pour money into the Japanese yen as the dollar (USDJPY) fell below Yen116, and the Nikkei 225 index slid to a six-week low. The British pound (GBPUSD) fell 0.5% to $1.5726 after U.K. inflation hit its lowest since September 2002.
Gold prices(GCF5) pushed slightly over $1,200 an ounce as global tensions rose.
