U.S. stock-index futures were lower on Tuesday as investors moved to reduce risk ahead of House Speaker Nanci Pelosi’s pending visit to Taiwan, the first visit by a high-ranking U.S. government official in more than 25 years, stoking concern of increased tensions between the U.S. and China.
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%.
U.S. government debt prices traded higher Tuesday morning as investors awaited Pelosi’s trip to Asia and looked ahead to Friday’s jobs report.
The yield on the benchmark 10-year Treasury note dropped to 2.553% and the yield on the 30-year Treasury bond also fell to 2.891%. Yields move inversely to prices.
The pre-market moves came as stocks slipped during the first regular trading day of August after all the major averages finished their best month since 2020. 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.
Pelosi is scheduled to arrive in Taiwan on Tuesday evening local time and meet with Taiwanese government officials, in what would be the first visit by a House speaker to the democratically governed island since 1997.
Beijing, which claims Taiwan as part of its territory, has warned Pelosi and the U.S. administration not to set foot there. Chinese officials have threatened unspecified military countermeasures should her visit proceed.
Taiwan is a democratic self-ruled island that China sees as a runaway province, and Beijing has been vocal about its opposition to Pelosi’s trip.
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“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.
“Whatever actions Beijing takes, it could trigger additional sanctions on China and sharply increase the risk of a direct military skirmish between the U.S. and China,” said Chen Zhao, Chief Strategist with global economic research firm Alpine Macro. “It is prudent for investors to think ahead and find ways to hedge their portfolios against the risk of a full-blown military confrontation between China and the U.S.”
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. More earnings data is due out Tuesday with reports from Uber (UBER) – Get Uber Technologies Inc. Report, Starbucks (SBUX) – Get Starbucks Corporation Report, PayPal (PYPL) – Get PayPal Holdings Inc. Report, Advanced Micro Devices (AMD) – Get Advanced Micro Devices Inc. Report, and more.
CVS Health (CVS) – Get CVS Health Corporation Report, Yum! Brands (YUM) – Get Yum! Brands Inc. Report, MGM Resorts (MGM) – Get MGM Resorts International Report and eBay (EBAY) – Get eBay Inc. Report will report their second-quarter earnings results on Wednesday, while Alibaba (BABAF) , Eli Lilly (LLY) – Get Eli Lilly and Company Report, Warner Bros. Discovery (WBD) – Get Warner Bros. Discovery Inc. Report, Amgen (AMGN) – Get Amgen Inc. Report and Block (SQ) – Get Block Inc. Class A Report will release their second-quarter numbers on Thursday.
Among specific stocks, Pinterest (PINS) – Get Pinterest Inc. Class A Report shares were up more than 18% at $23.68 in premarket trading after the online visual inspiration board company reported weak second-quarter results, which it said were impacted by a downturn in advertising revenue as well as increased costs, but an increase in users.
The company saw weakness from advertisers in the consumer-packaged-goods category, big-box retailers and mid-market advertisers, finance chief Todd Morgenfeld said, adding that the digital advertising environment will continue to be challenging.
Activist investor Elliott Management confirmed separately that it is Pinterest’s top investor and said it has “conviction in the value-creation opportunity” at the company.
Caterpillar (CAT) – Get Caterpillar Inc. Report, meantime, reported second-quarter earnings before the opening bell that handily beat analysts’ forecasts. The heavy equipment maker, considered an economic bellwether in terms of demand for its machinery, posted adjusted per-share earnings of $3.18 on sales of $14.2 billion.
Wall Street was looking for about $3.03 in adjusted per-share earnings from about $14 billion in equipment sales.