U.S. stocks were poised to open lower on Tuesday, as investors returned from a long weekend and got their first chance to respond to the heightened tensions between the West and North Korea.
Wall Street was also waiting to hear from a trio of Federal Reserve speakers during Tuesday’s session, looking for hints on the future path of interest rates.
Futures for the Dow Jones Industrial Average YMU7, -0.27% lost 60 points, or 0.3%, to 21,920, while S&P 500 index futures ESU7, -0.20% fell 5.45 points, or 0.2%, to 2,468.75. Nasdaq-100 index futures NQU7, -0.17% gave up 9.25 points, or 0.2%, to 5,979.
U.S. markets were closed for trade on Monday in observance of Labor Day, but U.S. stock futures traded in negative territory. European and Asian markets sold off on Monday, while gold and the yen advanced in a wider flight to assets perceived as less risky.
The standoff between North Korea and the U.S. and its allies escalated over the weekend after Pyongyang said it had successfully tested its largest ever nuclear bomb. The isolated regime is said to be ready to launch a new intercontinental ballistic missile as soon as this Saturday when the country celebrates its founding day.
The latest in Pyongyang’s series of missile and bomb tests has hardened the rhetoric from the U.S. Defense Secretary Jim Mattis warned North Korea that it will be met “with a massive military response” if it attacks the U.S., Japan or South Korea, while Nikki Haley, the U.S. ambassador to the United Nations, said at a UN Security Council emergency meeting that Kim Jong Un was “begging for war.”
“With tougher sanctions on North Korea looking to be the most likely scenario, markets will discount the possibility of war, but the risk-off mode may continue to persist a little longer, as there may be more missile launches on the horizon,” said Hussein Sayed, chief market strategist at FXTM.
“Investors have been searching for a catalyst that will lead to a steep market correction, but if a hydrogen bomb wasn’t enough to trigger the selloff, then any new experiments from the Kim Jong Un regime won’t get traction and investors should focus elsewhere,” he said in a note.
Gold GCZ7, +0.47% rose following the latest developments, trading at $1,335.40 an ounce, up $5 from Friday’s settlement. However, they hit almost $1,345 on Monday in electronic trade.
The yen USDJPY, -0.50% continued to rise, with the dollar buying ¥109.36, down from ¥109.73 late Monday in New York.
Economic news: A trio of Fed speakers are on the docket on Tuesday.
Fed Gov. Lael Brainard is due to speak at the Economic Club of New York at 7:30 a.m. Eastern Time, followed by Minneapolis Fed President Neel Kashkari speaking at the Carlson School of Management in Minneapolis at 1:10 p.m. Eastern.
At 7 p.m. Eastern, Dallas Fed President Robert Kaplan will participate in a moderated Q&A session in Dallas.
“Investors will be looking to assess how stronger than expected economic growth but weaker than forecast labor market data may influence the Fed’s monetary policy moving through towards the end of the year,” said Fiona Cincotta, market analyst at City Index, in a note.
On the data calendar, the only major release is a report on factory orders for July, due at 10 a.m. Eastern Time.
Stock movers: Shares of United Technologies Corp. UTX, -1.50% slipped 2.8% ahead of the bell after the industrial conglomerate said late Monday it had reached a deal to buy airplane-parts makerRockwell Collins Inc. COL, -0.34% for $23 billion, in the biggest aerospace deal in history. Rockwell shares were up 0.2%. News of a potential deal first surfaced last month.
Insmed Inc. INSM, -1.05% rocketed 103% after the biotech firm said its study into NTM lung disease met its primary endpoint and it now plans to request a priority review and accelerated approval.
U.S.-listed shares of Cellectis SA CLLS, +11.89% tanked 31% in premarket trade after the Food and Drug Administration ordered the French cell therapy specialist to put a cancer-drug trial on hold.
After the market closes on Tuesday, Hewlett Packard Enterprise Co. HPE, +2.15% is slated to report earnings.
European stocks were higher almost across the board, rebounding from North Korean-fueled losses from Monday.