(Bloomberg) — U.S. equity futures declined and stocks were mixed Tuesday as investors braced for tighter monetary policy, while also weighing geopolitical tensions and earnings reports.
Contracts on all three major U.S. gauges fell, with those on the Nasdaq 100 down more than 2% as tech giants including Apple Inc. and Microsoft Corp. dropped in premarket trading. General Electric Co. declined after missing sales expectations, while NVidia Corp. slid as people familiar with the matter said it’s quietly preparing to abandon its purchase of Arm Ltd. from SoftBank Group Corp.
European equities rebounded from their worst drop since June 2020, buoyed by stronger-than-forecast profit at telecom firm Ericsson AB, while Asian shares slid as Japan’s Topix entered a correction.
The Cboe Volatility Index, known as the VIX, rose for a sixth session on Tuesday, after briefly jumping intraday to the highest since October 2020 on Monday. The yield on 10-year Treasuries was little changed, while the dollar ticked up.
Volatility is hitting markets ahead of a key Federal Reserve meeting Wednesday, with U.S.-Russia tension over Ukraine also buffeting sentiment. Global equities at one point wiped almost $3 trillion on Monday, with the S&P 500 down more than 10% from a record high, before a dramatic reversal saw major U.S. benchmarks end in the green.
“Volatility is back,” Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, said on Bloomberg Television. “We’re having a sea-change in terms of Fed policy. Equity investors frankly have been behind the curve in anticipating what’s coming, so there’s a lot of catch-up to do.”
Global shares are enduring their worst month since the pandemic roiled markets. The question facing investors is whether the slide is a buying opportunity or portends wider stress across more asset classes.
Strategists Predict Trouble for U.S. Stocks After Massive U-Turn
Russia Tension
In the latest development over Ukraine, where Russian troops are massing on the nation’s borders, the U.S. is putting as many as 8,500 troops on heightened alert for deployment to bolster NATO forces in Eastern Europe if needed. Russia has denied it intends to invade.
The market “is obviously getting a little bit jittery about what could happen, whether a military altercation might happen, and what it means for” U.S. sanctions on Russia, Lale Akoner, senior market strategist at BNY Mellon Investment Management, said on Bloomberg Television. She expects the tension to be resolved through a deal rather than conflict.
Elsewhere, oil stabilized after its biggest one-day slump this year. Bitcoin resumed its retreat amid weakness across a range of cryptocurrencies.
For more market analysis, read our MLIV blog.
What to watch this week:
- IMF launches the World Economic Outlook update Tuesday.
- U.S. Conference Board consumer confidence Tuesday.
- Fed monetary policy decision Wednesday.
- EIA crude oil inventory report Wednesday.
- U.S. new home sales, wholesale inventories Wednesday.
- South African Reserve Bank rate decision Thursday.
- U.S. initial jobless claims, durable goods, GDP Thursday.
- Euro zone economic confidence, consumer confidence Friday.
- U.S. consumer income, University of Michigan consumer sentiment Friday.
Some of the main moves in markets:
Stocks
- Futures on the S&P 500 fell 1.6% as of 8:23 a.m. New York time
- Futures on the Nasdaq 100 fell 2.2%
- Futures on the Dow Jones Industrial Average fell 0.8%
- The Stoxx Europe 600 rose 0.7%
- The MSCI World index fell 0.2%
Currencies
- The Bloomberg Dollar Spot Index rose 0.3%
- The euro fell 0.5% to $1.1274
- The British pound fell 0.2% to $1.3466
- The Japanese yen was little changed at 114.00 per dollar
Bonds
- The yield on 10-year Treasuries was little changed at 1.76%
- Germany’s 10-year yield advanced two basis points to -0.09%
- Britain’s 10-year yield advanced four basis points to 1.17%
Commodities
- West Texas Intermediate crude rose 0.2% to $83.47 a barrel
- Gold futures fell 0.1% to $1,842.20 an ounce
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