Wall Street was set for a lower opening Tuesday after investors sought a profit from the prolonged trade dispute in the US and lowered expectations for a large cut rate from the Federal Reserve later this month.
A decrease of 3M Co (N: MMM) to “carry the sector” from RBC Capital Markets to macro pressures from China, auto and electronics added to negative sentiment. Industrial conglomerate shares fell by 1.6% in pre-trading trade.
Exposed stocks in China have fallen, with Boeing Co (N: BA), the only single US exporter in China, absorbing 0.2% before issuing orders and deliveries for the second quarter. Caterpillar Inc (N: CAT) fell 0.6%.
Chipmakers, including Qualcomm Inc. (O: QCOM), Advanced Micro Devices Inc. (O: AMD), Intel Corp. (O: INTC) and Nvidia Corp. (O: NVDA), dropped between 0.5% and 0.9%.
“Of course, there is nervousness … the fact that no trade agreement has been reached nor does it seem close and that the employment rate raises the question of how quickly it will lower the Fed’s interest rates,” said Rick Partner Meckler, Cherry Lane Investments in New Vernon, New Jersey.
“Without resolving the two points, it is difficult for the market to push to even higher levels when it has already won so much this year.”
The market expected a 75 percent chance of a 25-point cut and a 25 percent chance of a 50-point cut a week ago, according to the FedExatch instrument of the CME Group. That was 95% and 5% respectively Tuesday.
The focus this week will be on the remarks of the Fed chief of Jerome Powell in his two-day testimony before the congress, beginning Wednesday. Also Wednesday is the minute of June’s central bank policy meeting.
At 8:27 am ET, Dow e-minis were down 92 points, or 0.34%. The S & P 500 e-minis were down 9.75 points, or 0.33%, and the Nasdaq 100 e-minis were down 26 points or 0.33%.
Banking stocks will be held on Tuesday after the Fed has a conference to discuss the effectiveness of stress tests for large lenders.
Cisco Systems Inc (O: CSCO) network equipment manufacturer has fallen 1.3% in deal to buy optics component manufacturers Acacia Communications Inc. (O: ACIA) for $ 2.84 billion in cash. Acacia shares rose by 37.4%.
PepsiCo Inc. (O: PEP) earned 0.9% as the drink maker beat quarterly analysts’ earnings estimates and profit, benefiting from demand for carbonated drinks and chips as well as its sparkling waters.
Second-quarter earnings are expected to start seriously next week, with Citigroup (N: C) starting the results for major US lenders on Monday and Fang-member Netflix Inc. (O: NFLX) reporting later this week.
Earnings in S & P 500 companies are expected to decrease 0.2 percent from a year ago, according to IBES Refining Data./Investing.com