On Tuesday, US stock indexes were set for a lower opening over concerns that tensions between the United States and China could worsen because of a visit of US House Speaker, Nancy Pelosi, to Taiwan.
The financial markets have already been under a lot of pressure because of the fallout from rising inflation, the energy crisis in Europe, the Russia-Ukraine war, and financial conditions’ tightening.
The latest geopolitical uncertainty added more to the pressure, as premarket trading saw shares of a number of chipmakers, with exposure to China, record declines.
There was a fall in Nvidia Corp, Micron Technology Inc., Intel Corp, Qualcomm, and Advanced Micro Devices between 0.9% and 1.3%.
There was a rise in the CBOE volatility index, which is regarded as the fear gauge of Wall Street, as it climbed to its highest level in almost a week to 24.23 points.
Market analysts said that Chip stocks have great Asian exposure, with almost 70% of the sales of chip equipment companies coming from the region, which justified the concerns.
July saw Wall Street record its biggest monthly gains since 2020, but the start of August has been a lackluster one to say the least.
This was primarily because of recession fears, as data showed a weakening in manufacturing activity not just in the United States, but also in Asia and Europe.
Keeping that in mind, investors have become quite jittery about the future of corporate America.
Market analysts said that even a little bit of geopolitical uncertainty can prompt traders who benefitted last week to take some of the profit off the table.
There was a 0.54% decline in Dow e-minis at 8:17 a.m., which lost 178 points and a 0.65% drop in S&P 500 e-minis saw them lost 25.75 points.
There was a 0.87% loss in Nasdaq 100 e-minis that came down by 112.75 points.
A 3.4% fall was seen in Caterpillar Inc., as it suspended its operations in Russia and faced supply-chain bottlenecks, which saw its quarterly sales decline.
There was also a 2% drop in DuPoint de Nemours, as the full-year outlook was adjusted downwards by the industrial material’s maker.
A downbeat profit forecast for 2022 also saw shares of credit-rating firm S&P Global Inc. come down by 2.5%.
Meanwhile, there was a 14% gain in Uber Technologies, as the ride-hailing company saw cash flow turn positive in the quarter for the first time and also forecast an upbeat profit for the third quarter.
A 17.8% rise in Pinterest Inc. was also recorded, as the digital-pin boarding firm’s largest shareholder title was taken up by Elliot Investment Management.
There was also a 5.4% jump in Arista Network Inc., thanks to stronger results for the second quarter of the cloud networking solutions firm.
As far as data is concerned, the US Labor Department is scheduled to release data on Friday about US jobs for the month of June, which will be keenly watched for future policy movements from the Fed.