The major U.S. index futures are pointing to a lower opening on Tuesday, with stocks likely to extend the pullback seen over the two previous sessions.
Waning optimism about a near-term interest rate cut may continue to weigh on the markets following last Friday's better than expected monthly jobs data.
The Labor Department report showing much stronger than expected job growth in the month of June put a big dent in hopes the Federal Reserve will cut interest rates at its next meeting later this month.
Nonetheless, upcoming Congressional testimony from Fed Chairman Jerome Powell may keep some traders on the sidelines.
Powell is due to testify before the House Financial Services Committee on Wednesday and before the Senate Banking Committee on Thursday.
The Fed chief is not likely to specifically outline the central bank's plans to lawmakers, but traders are likely to closely analyze his comments for clues about the outlook for rates.
Stocks came under pressure early in the trading session on Monday and remained mostly lower throughout the day. With the drop on the day, the major averages pulled back further off the record closing highs set last Wednesday.
The major averages ended the day firmly in negative territory but off their lows of the session. The Dow slid 115.98 points or 0.4 percent to 26,806.14, the Nasdaq slumped 63.41 points or 0.8 percent to 8,098.38 and the S&P 500 fell 14.46 points or 0.5 percent to 2,975.95.
The weakness on Wall Street partly reflected waning optimism about a near-term interest rate cut following last Friday's much better than expected jobs data.
CME Group's FedWatch Tool still points to a rate cut at the next Federal Reserve meeting later this month, although expectations have dramatically shifted toward a 25 basis point cut rather than a 50 basis point cut.
The shift came after the Labor Department's closely watched report showed employment jumped by 224,000 jobs in June compared to expectations for an increase of 160,000 jobs.
A notable drop by Apple (AAPL) also weighed on the markets, with the tech giant tumbling by 2.1 percent after Rosenblatt Securities downgraded its rating on the company's stock to Sell from Neutral.
Fellow Dow component Boeing (BA) also fell by 1.3 percent after Saudi Arabia's flyadeal became the first airline to officially cancel an order for the beleaguered aerospace giant's 737 MAX aircraft.
Biotechnology stocks moved sharply lower over the course of the trading session, resulting in a 1.8 percent slump by the NYSE Arca Biotechnology Index.
The biotechnology index continued to give back ground after ending last Wednesday's trading at its best closing level in well over two months.
Significant weakness was also visible among computer hardware stocks, as reflected by the 1.4 percent drop by the NYSE Arca Computer Hardware Index.
NetApp (NTAP) led the sector lower after Citigroup downgraded its rating on the data storage provider to Sell from Neutral.
Brokerage, networking, and steel stocks also saw considerable weakness on the day, moving to the downside along with most of the other major sectors.
Commodity, Currency Markets
Crude oil futures are rising $0.24 to $57.90 barrel after inching up $0.15 to $57.66 a barrel on Monday. Meanwhile, after edging down $0.10 to $1,400 ounce in the previous session, gold futures are falling $5.60 to $1,394.40 an ounce.
On the currency front, the U.S. dollar is trading at 108.82 yen compared to the 108.72 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1205 compared to yesterday's $1.1214.
Asia
Asian stock moved mostly lower on Tuesday as sentiment turned cautious ahead of Fed Chairman Jay Powell's two-day testimony to Congress on Wednesday and Thursday, with markets waiting to see whether the language will be dovish enough after the release of a stronger than expected jobs report.
Powell is due to testify before the House Financial Services Committee on Wednesday and before the Senate Banking Committee on Thursday.
China's Shanghai Composite Index dipped 5.13 points or 0.2 percent to 2,928.23 as investors fretted about a lack of clarity in U.S.-China trade talks following the G20 summit in Japan. Hong Kong's Hang Seng Index slid 215.41 points or 0.8 percent to 28,116.28.
Meanwhile, Japanese markets eked out small gains even as technology shares slumped after Rosenblatt Securities downgraded its rating on Apple's stock to Sell from Neutral.
The Nikkei 225 Index edged up 30.80 points or 0.1 percent to 21,565.15, led by defensive shares such as Fast Retailing, KDDI and FamilyMart Uny, which climbed 1.5 percent, 2.3 percent and 4.1 percent, respectively. The broader Topix closed 0.2 percent lower at 1,574.89.
Apple supplier Murata Manufacturing gave up 2 percent, Taiyo Yuden tumbled 4 percent and TDK Corp. declined 1.5 percent.
Australian markets finished marginally lower, with banks pacing the declines as the country's banking regulator raised the capital buffer for banks by less than originally proposed.
The benchmark S&P/ASX 200 Index edged down 6.50 points or 0.1 percent to 6,665.70, while the broader All Ordinaries Index slipped 7.30 points or 0.1 percent to close at 6,750.10.
The big four banks fell between 0.3 percent and 0.7 percent. Miners BHP, Fortescue Metals Group and Rio Tinto rose between 0.9 percent and 1.4 percent as rating agency S&P raised its 2019-21 iron ore price forecasts.
Gold miner Newcrest Mining dropped 1.3 percent to extend losses for a third straight session as gold prices eased on a firmer U.S. dollar.
Australia business confidence weakened in June after rising sharply in May, monthly survey data from National Australia Bank showed today.
The business confidence index fell 5 points to +2 in June, and the decline was broad-based across industries. Meanwhile, the business conditions index rose by 2 points to +3, driven by increases by the employment and trading sub-indexes.
Seoul shares retreated on economic concerns as a Japanese minister ruled out a withdrawal of restrictions on Japanese high-tech exports to South Korea, saying the curbs did not violate World Trade Organization rules. The benchmark Kospi ended down 12.14 points or 0.6 percent at 2,052.03.
Europe
European stocks haven fallen on Tuesday after a drop by Apple shares pressured the broader tech sector on Wall Street overnight and chemicals major BASF warned profits would nearly halve in the second quarter.
Meanwhile, caution prevailed ahead of Fed Chairman Jay Powell's two-day testimony to Congress on Wednesday and Thursday, with markets waiting to see whether the language will be dovish enough after the release of a stronger than expected jobs report.
While the German DAX Index has slumped by 1 percent, the French CAC 40 Index is down by 0.4 percent and the U.K.'s FTSE 100 Index is down by 0.1 percent.
Swiss engineering firm ABB has moved notably lower after it announced an agreement to sell its solar inverter business to Italian company Fimer SpA.
Nordic lender Danske Bank has also tumbled after cutting its 2019 earnings forecast for the second time, citing weak trading and higher costs.
Remy Cointreau Group shares have also come under pressure. The company said its Chief Executive Officer Valerie Chapoulaud-Floquet will resign by the year-end due to personal reasons.
British Airways owner IAG has also dropped after the airline was slapped with a record fine of more than £183 million over a data-theft incidence.
On the other hand, online delivery firm Ocado has soared as it maintained an optimistic outlook in spite of the Andover-related disruption in February.
U.S. Economic Reports
At 10 am ET, the Labor Department is scheduled to release its report on job openings and labor turnover in the month of May. Job openings are expected to rise to 7.479 million in May after dipping to 7.449 million in April.
St. Louis Federal Reserve President James Bullard is also due to deliver a welcome address at the Official Monetary and Financial Institution Forum's main meeting at Washington University's Knight Center in St. Louis, Missouri, at 10 am ET.
At 1 pm ET, the Treasury Department is scheduled to announce the results of its auction of $38 billion worth of three-year notes.
Atlanta Fed President Raphael Bostic is also scheduled to speak about monetary policy at the OMFIF meeting at 1 pm ET.
At 2 pm ET, Fed Vice Chairman for Supervision Randal Quarles is due to deliver the keynote speech at a "Stress Testing: A Discussion and Review" Conference hosted by the Boston Fed in Boston, Massachusetts.
Stocks In Focus
Shares of Acacia Communications (ACIA) are spiking in pre-market trading after the networking company agreed to be acquired by Cisco Systems (CSCO) for $70 per share in cash.
Beverage and snack giant PepsiCo (PEP) may also move to the upside after reporting fiscal second quarter earnings that beat analyst estimates on both the top and bottom lines.
On the other hand, shares of 3M (MMM) may move to the downside after RBC Capital Markets downgraded its rating on the diversified manufacturer to Sector Perform from Outperform.
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