Dow futures drop over 200 points ahead of earnings deluge, as China stocks fall

Stock futures pointed to a losing session on Tuesday, as appetite for riskier assets such as equities took a knock as a two-day rally for China’s stock market began to unravel. Investors were also braced for a heavy deluge of earnings from major companies such as Caterpillar Inc.

How are major indexes trading?

Dow Jones Industrial Average futures YMZ8, -1.23% fell 261 points, or 1%, to 25,032, while S&P 500 futures ESZ8, -1.36% fell 31.50 points, or 1.1%, to 2,725. Nasdaq-100 futures NQZ8, -1.64% slid 98.5 points, or 1.4%, to 7,057.25.

DJIA, -0.50% On Monday, Dow industrials DJIA, -0.50% dropped 126.93 points, or 0.5%, to end at 25,317.41, while the S&P 500 SPX, -0.43% shed 0.4%, to close at 2,755.88. The Nasdaq Composite Index COMP, +0.26% managed a 0.3% gain, to finish at 7,468.63.

What’s driving the markets

More than 150 companies are on tap to announce financial results this week, with Caterpillar Inc. CAT, -1.99% on the docket for Tuesday, along with McDonald’s Corp. MCD, -0.50% and 3M Co. MMM, -0.68% Investors are pinning hopes that stock markets will find fresh impetus to move higher via those results.

But jittery investors were looking around at risks piling up, with China in the spotlight as the Shanghai Composite Index SHCOMP, -2.26% gave back part of a two-day rally, falling 1.3%. That is as government officials have spent the last few days trying to prop the market up with verbal encouragement for investors.

U.S. -China trade tensions are also a lingering factor for investors. On Monday, came news that two U.S. Navy warships sailed through the Taiwan Strait on Monday, but were shadowed closely by Chinese warships.

Elsewhere, Italy’s budget plan is expected to told to revise its budget by the European Commission on Tuesday, as the back-and-forth continues between the country’s antiestablishment government and Brussels.

Aside from earnings, investors continue to worry about how higher interest rates could impact the economy, as the Federal Reserve has indicated a move to tighten up monetary policy by year’s end.

What are other markets doing?

Losses weren’t just felt in China, as the Nikkei 225 index NIK, -2.67% tumbled 2.3% and the Hong Kong’s Hang Seng Index HSI, -3.08% dropped 2%. European stock futures indicated a mixed start.

As investors backed away from perceived riskier assets such as stocks, they sought a haven in the Japanese yen USDJPY, -0.58% , which was up around 0.2% against the dollar to ¥112.57. Gold prices GCZ8, +1.20% also inched up, while oil futures CLX8, +0.19% slipped.

And the yield on the 10-year Treasury note TMUBMUSD10Y, -1.63% fell 0.7% to 3.171%. Yields move inversely to price.


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