2-6-18 8:23 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 200-point loss after trading in a 1,100-point range in the run-up to Wall Street's open.

That is as global equities picked up the selling baton from historic losses on Wall Street on Monday, with sharp losses across the globe.

What are the main benchmarks doing?

Down to as low as 23,088 earlier, Dow Jones Industrial Average futures fell around 305 points, or 1%, to 23,641. It rose to as high as 24,225 at one point during the session.

S&P 500 futures were last down 23.20 points, or 0.9%, to 2,583. Nasdaq-100 futures dropped 51.75 points, or 0.8%, to 6,378.

In a brutal session Monday, the Dow plunged nearly 1,600 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 Wall Street digested the steep selloff on Monday. The weakness already began with last week when data showing a faster-than-expected pickup 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 traded at 2.714%, compared with 2.794% Monday afternoon in New York and a peak of 2.88%. 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)

Futures for the Volatility Index were up 35% to 50.20, having dropped to as low as 23.75 earlier on Tuesday.

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?

Archer Daniels Midland Co. (ADM) is among the companies due to report ahead of the open on Tuesday.

General Motors Inc.'s(GM) shares gained slightly (http://www.marketwatch.com/story/general-motors-stock-gains-after-earnings-beat-expectations-2018-02-06)after the auto maker reported fourth-quarter earnings that beat expectations.

Gilead Sciences Inc.(GILD), Chipotle Mexican Grill Inc.(CMG), Walt Disney Co.(DIS) and Snap Inc.(SNAP) quarterly reports are due 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)

(http://www.marketwatch.com/story/snap-earnings-snapchat-redesign-is-a-ghost-amid-facebook-concerns-2018-02-05)Allergan PLC(AGN) shares rose 1.8% in premarket after a posting results and a positive late-stage clinical trial of its migraine drug (http://www.marketwatch.com/story/allergan-shares-surge-after-positive-late-stage-migraine-drug-results-2018-02-06).

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 08:23 ET (13:23 GMT)

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