Stocks set to plunge at the open

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NEW YORK (CNNMoney) -- U.S. stocks were set for a sharply lower open Monday, following a global sell-off as investors fret over the European debt crisis, with the situation in Greece especially worrisome.

Dow Jones industrial average (INDU), S&P 500 (SPX) and Nasdaq (COMP) futures fell more than 1% ahead of the opening bell. Stock futures indicate the possible direction of the markets when they open at 9:30 a.m. ET.

U.S. stocks posted solid gains Friday, clinching a five-day winning streak for the first time in more than two months. The Dow and S&P were each up around 5%. The tech-heavy Nasdaq climbed 6.3% for the week. The five-day move was the best in more than two years.

But investors' primary attention remains on Europe's debt crisis.

European Union finance ministers reached an agreement Friday on a package of reforms aimed at strengthening economic governance across the monetary and currency union.

But the plan for increased stringency in Europe didn't ease investors' fears for how the region will get out of its current situation.

The group of leaders concluded their meeting in Poland by deciding to wait until October before giving Greece the next round of funding to help it bail out from its debt load.

Europe's debt crisis: 5 things you need to know

"We are drawing closer to the date at which the Greek government is going to run out of money," said Mark Luschini, the chief investment strategist at Janney Montgomery Scott. "And yet you still have some lack of commitment on the part of the institutions involved in shoring up that financing."

Even though the Greek economy is relatively small, "the great unknown is problematic for investors" said Luschini.

Meanwhile, President Obama is set to unveil a plan Monday detailing the U.S. plan for cutting the national debt by $3 trillion over the next decade.

Because the president's plan includes tax increases, investors are skeptical that Washington will ever be able to pass anything. "Likely there is going to be this debate, and likely a heated one that will likely reach a stalemate," said Luschini.

Also this week, investors are waiting to hear from Federal Reserve Chairman Ben Bernanke. The Federal Open Market Committee expanded its meeting to two days from one, which investors have taken as a sign that the policymaking committee will take action. The Fed could try to pump money into the economy by purchasing bonds through a third round of quantitative easing, known as QE3.

World markets: European stocks plunged in midday trading. Britain's FTSE 100 (UKX) dropped 1.6%, while the DAX (DAX) in Germany sank 2.6% and France's CAC 40 (CAC40) sank 2.5%.

Asian markets ended lower. The Shanghai Composite (SHCOMP) shed 1.8% and the Hang Seng (HSI) in Hong Kong fell 2.8%. The Tokyo stock market was closed for a holiday.

Economy: After the start of trade, the National Association of Home Builders and Wells Fargo will release a report with their housing affordability index. Economists polled by Briefing.com expect the reading stayed flat at 15 in January.

Companies: Netflix (NFLX) co-founder and CEO Reed Hastings sent a blogpost overnight apologizing for the way the recent changes in charges were communicated and renaming the its DVD-by-mail service Qwikster. Shares of Netflix were down 1.4% in premarket trade.

The global industrial product company Tyco International (TYC) announced Monday that it will separate into three independent, publicly traded companies. Shares of Tyco jumped 7.8% in premarket trade.

Currencies and commodities: The dollar edged up against the euro and the British pound but lost ground against the Japanese yen.

Oil for October delivery, nearing expiration, slipped $1.05 to $86.91 a barrel.

Gold futures for December delivery dipped $1 to $1,813.70 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury rose, pushing the yield down to 1.99%.