By Peter Nurse
Investing.com - U.S. stocks are set to open lower Tuesday, with the tech sector seen continuing last week’s rout as investors reevaluate their stance after recent strong gains.
At 7:10 AM ET (1110 GMT),S&P 500 Futures traded 21 points, or 0.6%, lower, the Dow Futures contract fell 20 points, or 0.1%, while Nasdaq 100 Futures underperformed, dropping 230 points, or 2%.
The major averages all hit two week lows last week. That said, the tech-heavy Nasdaq Composite had its worst week since March due to doubts over positioning and stretched valuations. These worries were exacerbated on Friday when the Financial Times reported that options trading by Japan’s Softbank (OTC:SFTBY) had inflated these stocks.
Still, the question remains whether this selloff signifies anything more than a correction after the tech sector’s sharp runup throughout the Covid-19 pandemic.
Technology stocks remain investors’ best bet and can continue driving returns in the current bull market, according to Peter Oppenheimer, Goldman Sachs’s chief global equity strategist, in a research note Monday.
Goldman maintained its overweight recommendation in tech stocks in every region thanks to the sector’s strong cash generation, earnings and stable balance sheets.
With this all in mind, the focus will remain on the tech sector Tuesday, with the likes of Tesla (NASDAQ:TSLA), Apple (NASDAQ:AAPL), Facebook (NASDAQ:FB) and Microsoft (NASDAQ:MSFT) all sharply lower in premarket trade.
Meanwhile, President Donald Trump continued to use China as a punchbag, promising a “decoupling” of the U.S. economy from the Chinese one if he is re-elected in November.
The data slate is largely empty Tuesday, but interest will soon turn to Friday's inflation figures for August. These are expected to show core CPI rising 0.2% month-on-month and 1.6% on a year-over-year basis, still clearly below the 2% level the Federal Reserve is now aiming for as an average.
Meanwhile, lawmakers are returning to Washington after the August recess facing the prospect of a government shutdown, and having to decide whether to approve an elusive fifth coronavirus stimulus package.
Oil prices dropped Tuesday, falling to their lowest in 10 weeks, with the WTI contract suffering the bulk of the selling after the U.S. Labor Day long weekend, which marks the end of the peak U.S. driving season.
U.S. crude futures traded 5.2% lower at $37.70 a barrel, while the international benchmark Brent contract fell 3.1% to $40.73.
Elsewhere, gold futures fell 0.6% to $1,923.35/oz, while EUR/USD traded 0.1% lower at $1.1802.