Global stock markets regained their footing Tuesday amid waning concerns about the technology sector facing greater government scrutiny.
Futures pointed to a 0.2% opening gain for the S&P 500 and the Stoxx Europe 600 was up 0.4% halfway through the trading session.
The tech-heavy Nasdaq Composite recovered from significant earlier losses and rose 0.1% in premarket trade, after a 1.8% decline the previous day. Tech shares in European and Asian bourses also recovered after struggling in early trading.
Political leaders in the U.S. and Europe have called for aggressive inquiries into Facebook Inc.’s data use after reports that Cambridge Analytica, a firm that helped President Donald Trump’s 2016 election campaign, had collected information from millions of Facebook users and used it without permission. Cambridge Analytica has said it complied with Facebook’s rules.
On Monday, investors grew concerned that the strong rally in tech shares over the past year—the sector gained 34% compared with 16% for the broader S&P 500—could eventually be derailed by regulators taking a closer look at these firms’ handling of data and growing market power. Tuesday’s rebound may be a sign these concerns are easing.
David Older, head of equities at Carmignac, believes the market overreacted to the Facebook news.
“When you think about growth rates [in stocks], this is the only place [the technology sector] globally where you are seeing strong growth,” he said. “I think a lot of investing in tech nowadays is about gathering data, so when you get question marks like these, it gives people pause.”
Nevertheless, Facebook shares, which closed down 6.7% the day before—their largest declines since 2014—were down another 0.7% in premarket trading Tuesday.
Meanwhile, futures pointed to a 9% opening loss for software giant Oracle Corp., after it reported earnings that were below expectations, and Uber Technologies Inc. said Monday that it had temporarily pulled its self-driving cars off the roads after one of the vehicles struck and killed a pedestrian in Arizona.
“We think the market will remain volatile in the next few days because of the news flow, not only the technology sector but also the FOMC meeting and the possibility of tariffs between the U.S. and China,” said Jack Siu, investment strategist for Asia-Pacific at Credit Suisse, referencing Wednesday’s Federal Open Market Committee meeting at which the central bank is widely expected to raise interest rates.
Investors are concerned that an increase in inflation could drive central banks to tighten monetary policy quicker than expected. This will be the first policy meeting headed by Jerome Powell, the new Fed chairman, and money managers are trying to gauge whether he will keep to three rate increases in 2018—futures markets give this scenario a 64% chance compared with 74% a month ago—or will do it four times instead.
Mr. Powell “doesn’t want to raise interest rates too much too fast,” said Patrick Spencer, vice chairman of equities at Baird, underscoring that rapid rate rises would push short-term yields too close to long-term ones—which investors often see as heralding an economic slowdown.
“The key is that he doesn’t want to invert the yield curve, which would hurt the very banking industry he regulates,” Mr. Spencer added.
The WSJ Dollar Index rose 0.2% Tuesday, while 10-year Treasury yields rose to 2.867% from 2.858% the previous day.
Money managers are grappling with other worries as well: Mr. Trump’s protectionist agenda has sparked opposition among world leaders, increasing fears of an escalating global trade spat.
“Ignore those [concerns] at your peril—there is a real threat because what usually follows protectionism is retaliation,” said Neil Williams, chief economist at Hermes Investment Management.
Write to Jon Sindreu at jon.sindreu@wsj.com and Gregor Stuart Hunter at gregor.hunter@wsj.com