Stock Futures Tread Water After Selloff, Oil Rally Builds

U.S. stock futures paused, a day after a selloff among some of America’s biggest technology firms dragged down broader indexes, while investors also contended with surging energy prices.

Futures tied to the S&P 500 were flat Tuesday, while tech-heavy Nasdaq-100 futures edged up 0.2%, suggesting indexes could recover some of the prior day’s losses. Blue-chip Dow Jones Industrial Average Futures rose 0.1%.

Behind a big chunk of the recent declines: losses for some of America’s biggest tech firms. Major tech stocks are especially sensitive to changes in bond yields, which affect the values that investors ascribe to far-off future profits. 

Those falls took a breather early Tuesday. Facebook shares were up 1.3% in premarket trading, a day after an outage shut down its social media and messaging platforms. Facebook whistleblower Frances Haugen is set to testify before Congress on Tuesday.

Beverage maker PepsiCo ‘s quarterly earnings are due to be reported ahead of the opening bell.

In Asia, stock markets tracked Monday’s losses on Wall Street. In Tokyo, the Nikkei 225 dropped 2.2%, with SoftBank Group, the tech-investing powerhouse that is one of the index’s biggest constituents, shedding 3.8%.

Concerns about China’s property companies, fanned in recent weeks by strains at China Evergrande Group, were rekindled by smaller rival Fantasia Group Holdings, which said late Monday it had failed to repay some maturing dollar bonds. Fantasia’s stock was halted from trading, while the Lippo Select HK & Mainland Property index fell more than 3%.

Evergrande, China’s most indebted property developer, has kept markets on edge and sparked protests at home as it struggles to survive.

Elsewhere in the region, South Korea’s Kospi Composite fell 1.9%, while the S&P/ASX 200 in Australia retreated 0.4%. Hong Kong’s Hang Seng Index retraced early losses to gain 0.4%. Mainland Chinese markets were closed for a holiday.

The pan-continental Stoxx Europe 600 rose 0.2%, led by banks, utilities and media companies. 

Investors have confronted a raft of concerns including supply-chain snarls, a seven-year high in oil prices, and expectations that the Federal Reserve will begin to scale back stimulus to fight inflation. The declines have capped an almost uninterrupted rally for U.S. indexes that began in March last year. Investors are settling in for a more challenging period ahead. 

“The equity markets today are worrying more about inflation, the possibility that we’re going to then see higher rates, and the fact that that does undermine the very lofty levels that they have been trading at,” said Rob Carnell, head of research for Asia-Pacific at ING.

The yield on the benchmark 10-Year U.S. Treasury note rose to 1.484% Tuesday, from 1.481% Monday. Yields move inversely to prices.

Meantime, surging energy prices threaten to further weigh on companies just as the earnings outlook is dimming. West Texas Intermediate, the U.S. oil benchmark, rose 0.5% to $78.06 a barrel, its highest level since 2014. Brent crude, the international benchmark rose 0.5% to $81.69 a barrel, its highest level since 2018.

Investors took a very bullish stance into the end of the third quarter, and that probably exacerbated the pullback, said Sean Darby, global equity strategist at Jefferies.  

“Positioning was way too aggressive, and we are probably not going to be in a period of decent macro releases either,” said Mr. Darby. “So I’m not too sure what the market is going to grab onto as a beacon of optimism in the short term.”.

Data on the U.S. trade deficit is due to be released at 8:30 a.m. ET. Economists expect the trade gap widened slightly in August after preliminary data showed exports hit record levels as the global economic recovery gathered pace and imports of consumer goods also rose. 

Also in focus is a survey of service sector purchasing managers that is due at 10 a.m. ET. The Institute for Supply Management’s survey is expected to show activity grew at a slower pace last month than in August amid consumer concerns about the Delta variant of Covid-19.

Concerns about Chinese property companies have been fanned by financial strains at Evergrande.

Photo: Getty Images/Getty Images

Write to Quentin Webb at quentin.webb@wsj.com and Will Horner at william.horner@wsj.com

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