Dipo Olowookere
By Investors Hub
The major U.S. index futures are pointing to a lower opening on Tuesday, with stocks likely to see further downside following the sell-off seen in the previous session.
A negative reaction to the latest batch of earnings news from companies such as Target (TGT) may lead to continued weakness on Wall Street.
Continued weakness among technology stocks may also weigh on the markets as traders remain worried about the outlook for demand.
Stocks moved sharply lower over the course of the trading session on Monday, adding to the steep losses posted last week. The major averages slid firmly into negative territory, with the Nasdaq falling to its lowest closing level in almost five months.
Although the major averages all closed notably lower, the Nasdaq underperformed its counterparts. The Nasdaq plunged 219.40 points or 3 percent to 7,028.48, while the Dow tumbled 395.78 points or 1.6 percent to 25,017.44 and the S&P 500 slumped 45.54 points or 1.7 percent to 2,690.73.
The sell-off on Wall Street came amid lingering concerns about the outlook for the global economy along with uncertainty about the potential for a trade deal between the U.S. and China.
At the Asia Pacific Economic Cooperation summit over the weekend, Vice President Mike Pence said the U.S. would not back down until China changes its ways.
The stark warning dampened investor hopes for a thaw in U.S.-Chinese trade relations ahead of the G20 summit later this month in Argentina.
A pullback by shares of Apple (AAPL) also weighed on the markets, with the tech giant plummeted by 4 percent after moving higher over the two previous sessions.
The steep drop by Apple came after the Wall Street Journal said the company slashed production orders for all three of the iPhone models that were unveiled in September.
Negative sentiment was also generated by a report from the National Association of Home Builders showing a substantial decrease in homebuilder confidence in the month of November.
The report said the NAHB/Wells Fargo Housing Market Index plunged to 60 in November after inching up by one point to 68 in October. Economists had expected the index to edge down to 67.
With the much bigger than expected decrease, the housing market index dropped to its lowest level since hitting 59 in August of 2016.
“Builders report that they continue to see signs of consumer demand for new homes but that customers are taking a pause due to concerns over rising interest rates and home prices,” said NAHB Chief Economist Robert Dietz.
Technology stocks saw substantial weakness on the day, contributing to the particularly steep drop by the tech-heavy Nasdaq.
Software stocks turned in some of the tech sector’s worst performances on the day, resulting in a 4.6 percent nosedive by the Dow Jones Software Index. Semiconductor and computer hardware stocks also saw considerable weakness.
Significant weakness was also visible among retail stocks, as reflected by the 3 percent slump by the Dow Jones Retail Index. The index ended the session at a nearly six-month closing low.
Biotechnology, tobacco, healthcare and chemical stocks also moved notably lower amid broad based weakness on Wall Street.
