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U.S. Stocks May See Further Downside After Yesterday's Sell-Off

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Following the steep drop seen in the previous session, stocks may see some further downside in early trading on Tuesday. The major index futures are currently pointing to a lower open for the markets, with the Dow futures down by 67 points.

The downward momentum on Wall Street comes amid continued concerns about the escalating U.S.-China trade war and rising tensions in Hong Kong.

The geopolitical concerns have led traders to seek safe haven assets such as U.S treasuries, resulting in a slump in U.S. bond yields.

The yield on the benchmark ten-year note is threatening to drop below the yield on the two-year note, which is widely seen as indicator of an impending recession.

In U.S. economic news, the Labor Department released a report showing consumer prices rose in line with economist estimates in the month of July, although the report also showed another bigger than expected increase in core consumer prices.

The Labor Department said its consumer price index climbed by 0.3 percent in July after inching up by 0.1 percent in both May and June. Economists had expected prices to rise by 0.3 percent.

Excluding food and energy prices, core consumer prices also rose by 0.3 percent for the second consecutive month, while economists had expected a 0.2 percent uptick.

The report showed the annual rate growth in both consumer prices and core consumer prices accelerated to 1.8 percent and 2.2 percent, respectively.

The faster rate of annual price growth may lead to worries that inflation concerns could add to the Federal Reserve's reluctance to continue cutting interest rates.

Several key U.S. economic reports are due to be released in the coming days, including the vast amount of data set to be released on Thursday.

Stocks moved sharply lower over the course of the trading session on Monday, adding to the losses posted last week. The major averages came under pressure early in the session and slid more firmly into negative territory as the day progressed.

While the major averages climbed off their worst levels going into the close, they still posted steep losses on the day. The Dow plunged 391.00 points or 1.5 percent to 25,896.44, the Nasdaq tumbled 95.73 points or 1.2 percent to 7,863.41 and the S&P 500 slumped 35.96 points or 1.2 percent to 2,882.69.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. Japan's Nikkei 225 Index slid by 1.1 percent, while Hong Kong's Hang Seng Index plummeted by 2.1 percent.

The major European markets have also moved to the downside on the day. While the German DAX Index has tumbled by 1.1 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index are both down by 0.8 percent.

In commodities trading, crude oil futures are falling $0.44 to $54.49 barrel after rising $0.43 to $54.93 a barrel on Monday. Meanwhile, after climbing $8.70 to $1,523.20 ounce in the previous session, gold futures are jumping $13.20 to $1,530.40 an ounce.

On the currency front, the U.S. dollar is trading at 105.18 yen compared to the 105.30 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1221 compared to yesterday's $1.1214.

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