Stock futures fell Tuesday morning as tensions between the U.S. and China increased ahead of an expected visit to Taiwan by House Speaker Nancy Pelosi.
Futures tied to the Dow Jones Industrial Average were 144 points lower, or 0.5%. S&P 500 futures slid 0.7%, and Nasdaq 100 futures dropped 0.8%.
Pelosi was expected to visit Taiwan and spend Tuesday night there, Reuters reported, citing sources. Leading up to the trip, Chinese officials threatened to take action is Pelosi moved forward with the visit. Pelosi would become the first House Speaker since Newt Gingrich in 1997 to visit Taiwan.
“We would like to tell the United States once again that China is standing by, the Chinese People’s Liberation Army will never sit idly by, and China will take resolute responses and strong countermeasures to defend its sovereignty and territorial integrity,” Chinese foreign ministry spokesman Zhao Lijian said in a daily briefing Monday.
Traders are also awaiting another raft of earnings from companies such as Starbucks, PayPal and Advanced Micro Devices. Caterpillar reported mixed results Tuesday before the bell.
Tuesday’s moves came after the major averages fell on the first day of August. The S&P 500 shed 0.28% to end at 4,118.63 while the Nasdaq Composite inched 0.18% lower and closed at 12,368.98. The Dow Jones Industrial Average slipped 46.73 points, or 0.14%, to end at 32,798.40. Last month, the major averages posted their biggest one-month gains since 2020.
“I think for sure it remains a bear market bounce,” Kevin Simpson of Capital Wealth Planning told CNBC’s “Closing Bell: Overtime” on Monday. ”… I think it was awesome the way the markets traded in July, but I think we’re not through any type of capitulation. The headwinds are just too rampant.
On the economic data front, investors this week are awaiting the July nonfarm payrolls report slated for release Friday for further clues into the state of the economy and the job market.