Reuters
U.S. stock-index benchmarks looked set to struggle to recover from a sharp selloff in the previous session powered by social-media giant Facebook Inc.’s worst daily decline in about four years, which helped foment investor unease.
Market participants also were anticipating the Federal Reserve’s two-day policy meeting which kicks off Tuesday. Investors are watching for signs that the central bank is taking a more aggressive path to normalizing monetary policy and lifting borrowing costs.
What are the main benchmarks doing?
Paring earlier losses, Nasdaq-100 futures NQM8, +0.04% rose 6.75 points, or 0.1%, to 6,921, while Dow Jones Industrial Average futures YMM8, +0.07% climbed 14 points to 24,706, a rise of less than 0.1%. S&P 500 futures ESM8, +0.14% inched up 4.20 points, or 0.2%, to 2,727.
Weighed by a tech selloff, the Dow DJIA, -1.35% fell 335.60 points, or 1.4%, to 24,610.91 on Monday, and turned negative for the year, down 0.4%. The S&P 500 index SPX, -1.42% dropped 1.4% to 2,712.92, while the tech-laden Nasdaq Composite Index COMP, -1.84% slumped 1.8% to 7,344.24, for its biggest one-day percentage decline since early February.
Read: The stock market meltup is over: Morgan Stanley
Opinion: The average investor has turned against Facebook and other FAANG stocks
What’s driving the markets?
There is no top-tier economic data due on Tuesday. The Fed, meanwhile, is expected to deliver an interest-rate hike on Wednesday, following the Federal Open Market Committee’s meeting. Rising interesting rates can dent the attractiveness of assets perceived as riskier, such as stocks.
Meanwhile, Facebook FB, -6.77% logged its biggest one-day percentage decline since 2014 on Monday and shed nearly $40 billion in market cap, amid a firestorm over third-party access to users’ personal data. Those losses in turn weighed on other social-media stocks and on the technology sector, which has been the best-performing group this year.
Read: Cambridge Analytica caught on hidden camera pitching dirty tricks
Senator Dianne Feinstein, the top Democrat on the Senate Judiciary Committee, late Monday called on Chairman Chuck Grassley to hold a hearing on Cambridge Analytica, which is suspected of using data from the accounts of millions of Facebook users to influence elections. Other lawmakers have called on Grassley to hold a hearing with the chief executives of Facebook, Alphabet’s Google GOOGL, -3.03% and Twitter Inc. TWTR, -1.69%
There were also further rumblings about the potential for trade wars, after reports that President Donald Trump may hit China with $60 billion in annual tariffs by Friday. The European Union is expected to unveil plans for a digital tax on major U.S. tech companies this week.
Which stocks were in focus?
Oracle Corp. ORCL, -0.61% shares tumbled around 7% after the company’s quarterly earnings report and forecast disappointed Wall Street’s expectations over cloud-software growth.
Shares of Facebook FB, -6.77% fell 0.9% in premarket trading. Citing sources, The Wall Street Journal reported that the company’s security chief, Alex Stamos, is planning to step down.
Read: Zuckerberg saved tens of millions of dollars by selling Facebook stock ahead of Monday’s decline
First Take: Oracle earnings rain on cloud parade
Shares of MGM Holdings Inc. MGMB, +0.00% could be active after the company’s board said Chairman and Chief Executive Gary Baker has been fired, and that it has begun to search for his replacement.
What are strategists saying?
“Yesterday might well be an isolated case but it fits in with our view that we are likely to see more tantrums in markets this year, certainly relative to the incredible calm that was 2017,” said a team of strategists at Deutsche Bank led by Jim Reid.
“Indeed, it’s fairly amazing that the S&P 500 has now seen 16 days of plus or minus 1% moves in either direction since the start of February, which compares to only 10 occasions through the 13 months ending in January,” Reid added in a note to clients.
“The markets drop yesterday is likely to continue today as Facebook lingering issues deepen. However, with the FOMC meeting begging this morning, the Fed watch vigil is in play and is one more reason to anticipate another trying session,” said Peter Cardillo, chief market economist at First Standard Financial, in a note to clients.
Read more: What to expect from the new Fed dot plot on interest rates
And see: It’s time for stock-market investors to refocus on the Fed
How are other markets faring?
European stocks SXXP, +0.37% traded mostly lower. Asian markets pared earlier losses, though Japan’s Nikkei benchmark NIK, -0.47% stood out with a drop of 0.5%.
Oil futures CLJ8, +1.43% moved higher, and the ICE U.S. Dollar Index DXY, +0.35% also gained. Gold futures GCJ8, -0.62% slipped.