The major U.S. index futures are pointing to a sharply lower opening on Tuesday following the mixed performances seen in the two previous sessions.
Substantial weakness in the overseas markets is likely to weigh on Wall Street amid worries about global economic growth and mounting geopolitical tensions.
A negative reaction to quarterly results from some big-name companies is also likely to contribute to initial weakness.
Overall trading activity may remain somewhat subdued, however, as another light day on the U.S. economic front may keep some traders on the sidelines.
Traders may look ahead to reports on new home sales and durable goods orders as well as the Federal Reserve's Beige Book, which may shed additional light on the outlook for interest rates.
Stocks fluctuated over the course of the trading session on Monday after failing to sustain an initial move to the upside. The major averages showed a lack of direction before closing on opposite sides of the unchanged line for the second consecutive session.
While the Nasdaq rose 19.60 points or 0.3 percent to 7,468.63, the Dow slid 126.93 points or 0.5 percent to 25,317.41 and the S&P 500 fell 11.90 points or 0.4 percent to 2,755.88.
The choppy trading on Wall Street came as traders expressed some uncertainty about the near-term outlook for the markets following recent volatility.
A lack of major U.S. economic data also kept some traders on the sidelines ahead of the release of reports on new home sales, durable goods orders, and consumer sentiment in the coming days.
The Federal Reserve is also due to release its Beige Book, a compilation of anecdotal evidence on economic conditions in the twelve Fed districts. The report may shed additional light on the outlook for interest rates.
Stocks initially benefited from a continued rally in China, with Chinese stocks extending the substantial rebound seen last Friday.
Chinese stocks surged higher amid optimism about additional stimulus to stimulate the world's second largest economy after last week's disappointing GDP data.
After three top Chinese financial regulators stepped in to bolster investor confidence last Friday, Chinese President Xi Jinping vowed "unwavering" support for the country's private sector.
In an open letter published in state media, Xi said Beijing would continue to value and protect the country's private business owners to ensure a "better tomorrow."
Buying interest waned shortly after the start of trading, however, as traders remain concerned about global economic growth and recent geopolitical tensions.
Banking stocks moved sharply lower over the course of the session, dragging the KBW Bank Index down by 2.7 percent. With the steep drop, the index fall to its lowest closing level in over a year.
Significant weakness was also visible among natural gas stocks, as reflected by the 2.2 percent slump by the NYSE Arca Natural Gas Index. The index tumbled to a five-month closing low.
The sell-off by natural gas stocks came amid a notable decrease by the price of the commodity, with natural gas for November delivery falling $0.112 to $3.138 per million BTUs.
Housing, biotechnology, and tobacco stocks also saw considerable weakness on the day, while strength among software and computer hardware stocks contributed to the gain posted by the tech-heavy Nasdaq.
Commodity, Currency Markets
Crude oil futures are slumping $1.15 to $68.21 barrel after inching up $0.08 to $69.36 a barrel on Monday. Meanwhile, after slipping $0.140 to $1,228.70 ounce in the previous session, gold futures are jumping $16.40 to $1,241 an ounce.
On the currency front, the U.S. dollar is trading at 112.18 yen compared to the 112.82 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1470 compared to yesterday's $1.1464.
Asia
Asian stocks fell sharply on Tuesday as geopolitical tensions and uncertainty about near-term outlook for the global economy forced investors to indulge in heavy selling in stocks from across various sectors.
Worries about Italy's budgetary woes and Brexit also weighed on the markets even as investors geared up for upcoming corporate earnings results.
Chinese stocks pulled back sharply after moving significantly higher over the two previous sessions. China's Shanghai Composite Index tumbled 60.05 points or 2.3 percent to 2,594.83, while Hong Kong's Hang Seng Index plummeted 806.60 points or 3.1 percent to 25,346.55.
Significant weakness was also visible among Japanese stocks, with the benchmark Nikkei 225 Index plunging 604.04 points or 2.7 percent to 22,010.78.
Metal, construction, glass & ceramics, paper, shipbuilding, chemicals, machinery, mining, insurance and pharmaceuticals stocks all declined sharply, while a few stocks from banking and automobile sections found some support.
In the Australian markets, energy, materials, healthcare, financial and utilities stocks tumbled. The benchmark S&P/ASX 200 Index ended down 61.80 points or 1.1 percent at 5,843.10, while the broader All Ordinaries Index slumped 61.30 points or 1 percent to 5,944.90.
Resolute Mining plunged more than 11 percent, Seven West Media ended lower by about 6.7 percent, and Washington H. Soul Pattinson & Co., Australian Pharmaceutical Industry and Origin Energy lost 4.4 to 5.4 percent.
Key banking stocks drifted lower. Commonwealth Bank announced the sale of its 80 percent stake in an Indonesian life insurance business for A$426 million.
Meanwhile, Healthscope moved up by about 19.3 percent, Bellamy's Australia gained 4.7 percent, Aveo Group advanced by 4.1 percent, Flight Centre Travel Group added 4 percent and Corporate Travel Management climbed by about 3 percent.
Europe
European stocks have moved notably lower during trading on Tuesday, with mounting geopolitical tensions and trade war concerns leading to weakness across various sectors.
While the German DAX Index has plunged by 1.8 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index are both down by 1 percent.
Shares of Atos SE have fallen sharply after the technology company lowered its 2018 revenue growth forecast. Atos also adjusted its 2019 targets to include the effects of its acquisition of U.S. company Syntel Inc.
Austrian chipmaker AMS is also posting a steep loss after the company provided disappointing fourth quarter earnings guidance.
Shares of Wartsila have also come under pressure after the Finnish ship technology and power-plant maker reported weaker than expected third quarter earnings.
On the other hand, building materials supplier Travis Perkins has moved notably higher after forecasting full-year results in line with expectations.
In economic news, German producer prices rose at the fastest pace in a year in September, figures from Destatis showed.
Producer prices grew 3.2 percent year-on-year in September after rising 3.1 percent in the previous month. Economists were looking for a 3.0 percent gain.
U.S. Economic Reports
At 9:30 am ET, Minneapolis Federal Reserve President Neel Kashkari is scheduled to give welcoming remarks at the Innovation in Early Childhood Development and K-12 Education Conference in Minneapolis, Minnesota.
The Treasury Department is due to announce the results of its auction of $38 billion worth of two-year notes at 1 pm ET.
At 1:30 pm ET, Atlanta Fed President Raphael Bostic is scheduled to give a speech on the economic outlook and monetary policy to the Committee of 100 at Louisiana State University in Baton Rouge, Louisiana.
Dallas Fed President Robert Kaplan is due to participate in a moderated Q&A session at Texas A&M University at the Galveston Economic Development Partnership 7th Annual Economic Development Summit in Galveston, Texas, at 2:15 pm ET.
At 6:15 pm ET, Chicago Fed President Charles Evans is scheduled to speak about current economic conditions and monetary policy in a Northwestern University moderated Q&A event in Evanston, Illinois.
Kansas City Fed President Esther George is due to participate in a panel on "Disruption in the Payments Landscape" at the SIBOS 2018 International Conference in Sydney, Australia, at 8 pm ET.
Stocks In Focus
Shares of 3M Co. (MMM) are moving sharply lower in pre-market trading after the diversified manufacturer reported weaker than expected third quarter results and cut its full-year guidance.
Heavy equipment maker Caterpillar (CAT) is also seeing notable pre-market weakness despite reporting third quarter results that exceeded analyst estimates. The company also reaffirmed its full-year guidance.
Shares of Quest Diagnostics (DGX) may also come under pressure after the medical laboratory operator reported third quarter earnings that matched analyst estimates but weaker than expected revenues.
Meanwhile, shares of Cadence Design Systems (CDNS) are moving sharply higher in pre-market trading after the electronic software company reported third quarter results that beat estimates on both the top and bottom lines.
Fast food giant McDonald's (MCD) may also move to the upside after reporting third quarter earnings and revenues that exceeded expectations.
Shares of Arconic (ARNC) could also see initial strength after a report from Reuters said the aluminum products maker is considering an $11 billion takeover offer from buyout firm Apollo Global Management (APO).
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