Stock futures fell slightly on Tuesday as April selling continued after a one-day bounce.
Futures tied to the Dow Jones Industrial Average eased about 200 points, or 0.6%. S&P 500 futures were down about 0.6%. Nasdaq 100 futures fell 0.6%.
On Monday, the Dow advanced more than 200 points, after cutting a near 500-point loss from earlier in the day. The dramatic market reversal pushed the Nasdaq Composite higher by 1.3% and the S&P 500 up by 0.6%.
“Quite an impressive reversal, unfortunately we don’t believe that [Monday’s] low is the end of the market’s drawdown,” wrote Rob Ginsberg, technical analyst with Wolfe Research. “The sell-off still feels a bit too orderly to us.”
The bounce was welcomed by investors after stocks ended the previous week on a sour note, with the Dow falling to its fourth losing week in a row and the S&P and Nasdaq hitting three-week losing streaks Friday. The tech-heavy Nasdaq fell into bear market territory last week, but after Monday’s comeback sits 19.8% from its record. For April, the S&P 500 is off by 5% and the Nasdaq is down more than 8%.
Monday’s reversal was led by names like Microsoft, Alphabet and Meta Platforms, which rallied in the afternoon amid falling interest rates and ahead of an intense week of earnings for mega cap tech stocks. Twitter also jumped after its board accepted Tesla CEO Elon Musk’s offer to take it private.
Alphabet and Microsoft were slightly higher in premarket trading Tuesday before their quarterly reports after the bell. Meta, Amazon and Apple will report later in the week.
UPS shares added more than 1% in premarket trading after the shipper’s quarterly earnings and revenue topped expectations. The company also reaffirmed its guidance. 3M shares were marginally higher in premarket trading after first-quarter results topped expectations.
“A third of the S&P is reporting [earnings] this week, and you’re probably going to see much of the same: lots of top- and bottom-line beats. Companies are going to talk about margin pressures and passing on price increases to the consumer, but they’re still going to highlight there’s still overall optimism about the economy,” Edward Moya, senior market analyst at Oanda, told CNBC.
Between the continuation of strong earnings and a quiet period from the Federal Reserve, there will likely be a relief rally in the market, Moya added.
“We’re not going to be getting more nervousness about Fed tightening, because we won’t be hearing much more about it until the May meeting,” he said.
In economic data, investors are expecting fresh numbers for new home sales and consumer confidence Tuesday morning.