2-6-18 6:18 AM EST | Email Article

By Barbara Kollmeyer, MarketWatch

Asia joins down market, with Nikkei sinking 4.7%

U.S. stock futures swung wildly in extremely volatile trading on Tuesday, with those for the Dow Jones Industrial Average pointing to a more-than 100-point loss after trading in a 1,100-point range in the run-up to Wall Street's open.

That's as global equities picked up the selling baton from historic losses on Wall Street on Monday, with sharp losses across Asia and Europe.

What are the main benchmarks doing?

Down to as low as 23,088 earlier, Dow Jones Industrial Average futures slipped 147 points, or 0.6%, to 23,807. It rose to as high as 24,225 at one poind during the session.

S&P 500 futures were last up 1 point to 2,608.50. Nasdaq-100 futures rose 1.50 points to 6,429.

In a brutal session Monday, the Dow plunged more than 1,500 at the low point (http://www.marketwatch.com/story/us-stocks-poised-for-fresh-selloff-as-dow-futures-slide-120-points-2018-02-05), as investors appeared to panic out of stocks. The index finished down 1,175.21 points, or 4.6%, to 24,345.75, marking its biggest one-day point drop ever. The S&P 500 dropped 113.19 points, or 4.1%, to 2,648.94. Before Monday, it had enjoyed the longest stretch without a 5% pullback in 20 years, but is now down more than 5% from its all-time intraday high (http://www.marketwatch.com/story/sp-500-registers-first-5-pullback-in-more-than-a-year-2018-02-05) of 2,872.87 on Jan. 26.

The S&P 500 and Dow also both turned negative for the year.

The Nasdaq Composite Index shed 273.42 points on Monday, or 3.8%, to end at 6,967.53, but remains 0.9% higher for the year.

Read:Here are the biggest losers among Dow and S&P 500 stocks in Monday's rout (http://www.marketwatch.com/story/here-are-the-biggest-losers-among-dow-and-sp-500-stocks-in-mondays-rout-2018-02-05)

What's driving the markets?

The volatile trading on Tuesday came as traders digested the steep selloff on Monday. The weakness already began with last week when data showing a faster-than-expected pick-up in inflation sparked fears that the Federal Reserve could embark on a quicker route to interest-rate hikes.

Yields were climbing again on Tuesday. The yield on the 10-year Treasury note last rose 1.4 basis points to 2.720%, after falling 5.8 basis points on Monday as investors sought shelter from tumbling equity prices. Yields move inversely to price.

Opinion: Here's some good news for investors about the stock market's plunge (http://www.marketwatch.com/story/heres-some-good-news-about-the-stock-markets-plunge-2018-02-05)

Some strategists have been warning for weeks that the seemingly unstoppable rally was due for a pullback. A spike in volatility appeared to push some traders to push the sell button. The Cboe Volatility Index , Wall Street's so-called fear gauge, surged 116% to 37.32 on Monday, which marked its loftiest level since August 2015, according to FactSet.

Read: 'Short-volatility Armageddon' craters a pair of Wall Street's most popular trades, could roil market (%e2%80%98Short-volatility%20Armageddon%e2%80%99%20craters%20a%20pair%20of%20Wall%20Street%e2%80%99s%20most%20popular%20trades,%20could%20roil%20market)

The VelocityShares Daily Inverse VIX Short-Term ETN (XIV) , used to bet on stable stock prices, slumped 84% in after-hours trading on Monday.

However, futures for the Cboe indicated that fear-gauge was pulling back. Futures fell 16% to a level of 28.05.

Opinion:Tony Robbins on stock market corrections: Get used to them (http://www.marketwatch.com/story/tony-robbins-on-stock-market-corrections-get-used-to-them-2018-02-02)

What were strategists saying?

"Rapid selloffs, such as the one today, can also be followed by market bounce backs as liquidity gets exhausted by programmatic selling. With next year's P/E (price/earning) on the S&P 500 now below 16, further positive impacts of tax reform and stabilization of bond yields...we think that the ongoing market selloff ultimately presents a buying opportunity," said Marko Kolanovic, global head of Macro Quantitative and Derivatives Strategy team at J.P. Morgan, in a note to clients.

"Although however tempting it may be to call this the start of the much needed correction many analysts have been calling for, those look to short the indexes must be cautious going into tomorrow's session in case of bounce," said James Hughes, chief market analyst at AxiTrader, in a note to clients.

"Heavyweight players and institutional investors -- especially in the U.S. -- seem to treat this selloff as nothing out of the ordinary as 5% corrections in the stock markets tend to happen more often than everyday people realize. However, if this perfect storm continues to develop and a new reality of higher bond yields and more aggressive monetary tightening sets in then the pain in the equities will persist," said Konstantinos Anthis, on the research team at ADS Securites in a note to clients.

Read:The stock market is plunging: Here's what advisers say you should do (http://www.marketwatch.com/story/the-stock-market-is-plunging-heres-what-advisers-say-you-should-do-2018-02-05)

What stocks are in focus?

General Motors Inc.(GM) and Archer Daniels Midland Co. are among the companies due to report ahead of the open on Tuesday, followed by Gilead Sciences Inc.(GILD) , Chipotle Mexican Grill Inc.(CMG) , Walt Disney Co.(DIS) and Snap Inc.(SNAP) after the close.

Snap earnings: Redesign is a ghost amid Facebook concerns (http://www.marketwatch.com/story/snap-earnings-snapchat-redesign-is-a-ghost-amid-facebook-concerns-2018-02-05)

BP Inc.(BP.LN) (BP.LN) could be active after the oil giant posted its first quarterly loss since mid-2016 (http://www.marketwatch.com/story/bp-posts-first-quarterly-loss-in-more-than-a-year-2018-02-06). (http://www.marketwatch.com/story/bp-posts-first-quarterly-loss-in-more-than-a-year-2018-02-06) Shares fell over 1% in London (http://www.marketwatch.com/story/uk-stocks-fall-to-10-month-low-in-global-market-rout-2018-02-06) on those results.

What are other assets doing?

European stocks (http://www.marketwatch.com/story/european-stocks-open-with-sharp-losses-after-wall-street-carnage-2018-02-06) were down across the board. The Nikkei 225 index slid 4.7% as most Asian markets finished in the red (http://www.marketwatch.com/story/asian-markets-fall-hard-continuing-global-selloff-2018-02-05). Hong Kong's Hang Seng Index logged a 5.1% plunge.

Gold futures rose $9.30 to $1,345.80 an ounce, while oil futures were down 0.5%. The ICE U.S. Dollar Index dipped slightly.

Bitcoin fell over 5% to $6,536.47.

 

(END) Dow Jones Newswires

February 06, 2018 06:18 ET (11:18 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.
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