US pre-open: Futures point to losses following Monday's gains
Wall Street futures were firmly in the red ahead of the bell on Tuesday as the Dow Jones looked set to fall short of extending Monday's gains into the new session.
As of 1225 BST, Dow Jones futures were down 0.56%, while S&P 500 and Nasdaq-100 futures had the indices opening 0.91% and 1.47% lower, respectively.
The Dow closed 618.34 points higher on Monday as investor sentiment got a boost after Joe Biden stated he was mulling over the idea of lowering tariffs on certain products imported into the States from China.
In the corporate space, shares in social media outfit Snap crashed over 28% after the firm warned that it would miss earnings and revenue targets in its current trading quarter and also cautioned of a slowdown in hiring. Big-name tech firms Meta Platforms, Alphabet, Amazon, Apple, Netflix, and Pinterest all followed Snap's lead to trade lower prior to the open.
"You can tell a share price is in trouble when even a drop 25% is hard to spot on the chart and Snap’s pre-market plunge is just such an example," said AJ Bell's investment director Russ Mould. "The self-styled camera company's stock now trades below the March 2017 flotation price of $17 and is down by some 80% from its September 2021 peak after a profit warning for the second quarter that cites a deterioration in the economic environment.
"Tighter monetary policy, meaning less and more expensive fun money for investors, and a series of share price crashes are dampening appetite for this sort of stock. We have gone from an environment of low growth, low rates, and low inflation, where any firm could grow on a secular basis was highly prized, to one where higher inflation means higher rates and also that growth is easier to find, at least in nominal terms," he added.
"That leads them toward cyclicals and value names, especially as paying lower multiples of sales, earnings, and book value, and possibly grabbing dividends in the meantime, offers more downside protection that high-flyers with no profits or cash flow or both. Snap is just the latest example of how even the slightest earnings disappointment can lead to hefty share price falls and we seem to be moving into the stage of the cycle where investors are more worried about return of their capital than return on their capital."
In terms of earnings, Abercrombie & Fitch and Ralph Lauren will report earnings before the open, while Urban Outfitters, Toll Brothers, and Nordstrom will report their latest set of quarterly earnings after the close.
On the macro front, flash readings of S&P's composite, manufacturing and services PMIs will be published at 1445 BST, while April new home sales and the Richmond Fed's May manufacturing index will follow at 1500 BST.
Elsewhere, Federal Reserve head Jerome Powell will deliver a speech at 1720 BST.
Reporting by Iain Gilbert at Sharecast.com