Stocks search for direction after huge tech-driven selloff; volatility expected to remain elevated

U.S. stocks were little changed on Tuesday, as an early rally faded and uncertainty over trade issues and the outlook for the technology and internet sectors kept buyers at bay, particularly in the absence of fundamental news like earnings.

Wall Street rose modestly in early trading, in what represented a partial rebound from the previous session’s sharp decline, which took the S&P 500 below a key technical level and erased the Nasdaq’s gains for the year. Both the S&P and the Nasdaq fell into negative territory in the first hour of trading, but subsequently turned higher.

Such volatility is expected to remain elevated as investors grapple with a number of key questions. President Donald Trump remained a particular focus for the equity market, with investors wary of any trade actions he might announce—particularly after China retaliated to U.S. tariffs with protectionist measures of its own—as well as his feud with Amazon, which he has repeatedly criticized over Twitter in the past week. The technology sector, which led the market’s decline on Monday, will also remain at the forefront of Wall Street’s attention.

What are the main benchmarks doing?

The Dow Jones Industrial Average DJIA, +0.66% rose 51 points, or 0.2%, to 23,706. The S&P 500 SPX, +0.38%  fell 2 points, or 0.1%, to 2,581. The Nasdaq Composite Index COMP, +0.18% slipped 0.2%, or 19 points, to 6,851.

The day’s move was largely a reaction to Monday’s selloff, when the S&P and the Nasdaq shed more than 2% and the S&P closed below its 200-day moving average for the first time since the United Kingdom’s vote for Brexit in June 2016. That closely watched technical level is used to gauge long-term momentum. While the Dow held above that level, all 30 of its components closed below their 50-day moving average, a sign that short-term momentum may be trending to the downside.

The Nasdaq turned negative for the year on Monday and neared correction territory, defined as a drop of at least 10% from a peak.

What’s driving markets

Investors will be on the lookout for volatility, which has been a hallmark of markets over the past few weeks. Despite the bumpy start to the month, April tends to be a strong month for stocks, including the strongest of the year for the Dow.

Don’t miss: Why stock investors should be welcoming the return of volatility

Tech stocks will likely remain on the radar, given they have been driving recent losses. Worries about Amazon.com Inc. AMZN, +0.27% given Trump’s attacks on the online retailer, could continue Tuesday after Vanity Fair reported that he’s seeking ways to damage the company. While Amazon is classified as a consumer-discretionary stock, it often moves on tech issues and it is part of the so-called group of “FAANG” names that drove markets higher in 2017 but have struggled more of late.

Read: Facebook is in bear market territory, Apple is in a correction, and they are far from alone

The trade situation, which has been knocking the stock market, should be another focus. China announced tariffs on about 130 U.S. goods over the weekend, in retaliation for the Trump administration’s planned tariffs on Chinese imports.

Also: What struggled in the first quarter? Stocks, bonds, basically everything

As for Federal Reserve speakers, Minneapolis Fed President Neel Kashkari, who’s not a voting member this year on the Fed’s rate-setting board, is expected to take part in a moderated discussion at the Regional Economic Indicators Forum in Duluth, Minn., at 9:30 a.m. Eastern Time. Fed Gov. Lael Brainard is due to speak on financial stability at New York University at 4:30 p.m. Eastern.

Check out: MarketWatch’s Economic Calendar

What strategists are saying

“This is still a market trading on fear instead of fundamentals and on tweets instead of technicals, which has made it frustratingly difficult to figure out where we’re headed in the near term,” said Andrew Adams, an investment strategist at Raymond James. “There’s just not much positive news to help balance out the daily onslaught of fear-producing headlines about trade wars and tech crises, especially since we are currently in between earnings seasons.”

Read: Data, earnings set to wrest stock market’s attention from Facebook and trade

Which stocks are in focus?

The “FAANG” names—in addition to Amazon, this group includes Facebook FB, -1.80% Apple AAPL, -0.65% Netflix NFLX, +0.70% and Google-parent Alphabet GOOGL, -0.72% GOOG, -0.52% —will continue to be in focus after their sharp losses on Monday.

Amazon was flat, coming off an early gain after the latest in a series of Trump tweets against the company.

Netflix gained 1%. Alphabet lost 0.7% and Apple fell 0.8%. Facebook fell 2%.

Read: Facebook is in bear-market territory as Apple flirts with a correction, and they are far from alone

Tesla Inc. TSLA, +3.34%  rose 2.7% after releasing first-quarter production data, which addressed concerns over its ability to turn out as many Model 3 sedans as it has promised.

General Motors Co. GM, +3.58%  rose 2.1% after reporting its March sales figures. It also said it would cease to report monthly sales in the future. Ford Motor Co. F, +1.93% rose 1.5% after reporting its own March sales.

Walmart Inc. WMT, +0.81%  rose 0.5% after CNBC reported the retailer is in talks to buy online pharmacy startup PillPack. That comes days after Walmart was reported to be in early talks to buy Humana Inc. HUM, +1.03%

21st Century Fox Inc. FOX, -0.28%  fell 0.5% after the media company proposed separating Sky News from the rest of Sky PLC SKY, +2.04%  to allay U.K. regulators’ concerns its bid to acquire the 61% of Sky it doesn’t already own. Fox also said Walt Disney Co. DIS, -0.04% has expressed interest in buying Sky News.

Spotify Technology Inc. SPOT, +0.00% is expected to make its trading debut on the New York Stock Exchange on Tuesday, via a direct listing where it floats its shares publicly but doesn’t offer new shares.

Opinion: This math shows why stock-market investors should be wary of buying into Spotify

And see: Spotify has fans on Wall Street as it prepares to go public

What are other markets doing?

Asian stock markets NIK, -0.45% HSI, +0.29% closed lower, as tech stocks tracked U.S. losses Monday.European stocks SXXP, -0.48% SXXP, -0.48% also fell, as traders returned from a long holiday weekend.

Oil prices CLK8, +0.86%  were modestly higher, while gold futures GCJ8, -0.72% slipped and the ICE U.S. Dollar Index DXY, +0.18% DXY, +0.18% clung to a thin gain.