The major U.S. index futures are currently pointing to a lower open on Tuesday, with stocks likely to see further downside after ending the previous session well off their worst levels but still mostly lower.
Technology stocks may see further downside amid concerns about valuations following the recent surge to record highs.
The downward momentum for the tech sector comes as traders look ahead to the release of Nvidia's (NVDA) first quarter results after the close of trading on Wednesday.
With Nvidia seen as a leader in the artificial intelligence space, the company's results and guidance could have a significant impact on the outlook for the markets.
Traders also continue to express concerns about elevated oil prices and a recent spike in treasury yields, although oil prices and yields are giving back some ground this morning.
"While the Nasdaq remains near highs and the broader AI trade is still intact, recent sessions have seen some profit-taking in semiconductors and mega-cap tech as yields rise and positioning looks increasingly stretched," said Daniela Hathorn, Senior Market Analyst at Capital.com.
She added, "The market is not abandoning the earnings and AI story but the combination of higher oil, higher yields and extremely strong positioning is making it harder for the sector to continue its near-vertical ascent without pauses or pullbacks."
Following the sharp pullback seen during last Friday's session, stocks saw continued weakness throughout much of the trading day on Monday but managed to regain some ground going into the end of the session.
The major averages climbed well off their worst levels of the day, with the Dow reaching positive territory. While the Dow climbed 159.95 points or 0.3 percent to 49,686.12, the S&P 500 edged down 5.45 points or 0.1percent to 7,403.05 and the Nasdaq slid 134.41 points or 0.5 percent to 26,090.73.
The early weakness on Wall Street came amid lingering concerns about the conflict in the Middle East, as President Donald Trump has warned Iran the "clock is ticking."
Trump said in a post on Truth Social that Iran "better get moving, FAST, or there won't be anything left of them," leading to worries about the U.S. renewing military action.
A report from Axios citing two U.S. officials said Trump is expected to convene his top national security team in the Situation Room on Tuesday to discuss military options.
The U.S.-Iran war has effectively closed the vital Strait of Hormuz, leading to a spike in crude oil prices and subsequent concerns about inflation and the outlook for interest rates.
Treasury yields soared last Friday amid speculation the Federal Reserve's next interest rate move could be an increase rather than a cut.
The price of crude oil and treasury yields moved to the upside over the course of the day, adding to the negative sentiment on Wall Street.
However, stocks regained some ground in late-day trading after Trump he has decide to hold off on attacking Iran tomorrow due to requests from Middle East leaders.
Trump said he has instructed the military to be "prepared to go forward with a full, large scale assault of Iran, on a moment's notice, in the event that an acceptable Deal is not reached."
Semiconductor stocks turned in some of the market's worst performances on the day, with the Philadelphia Semiconductor Index tumbling by 2.5 percent.
Considerable weakness was also visible among computer hardware stocks, as reflected by the 2.2 percent slump by the NYSE Arca Computer Hardware Index.
On the other hand, oil service stocks showed a substantial move to the upside, driving the Philadelphia Oil Service Index up by 3.4 percent.
Oil producer, telecom and commercial real estate stocks also saw notable strength, helping limit the downside for the markets.
Commodity, Currency Markets
Crude oil futures are falling $0.48 to $108.18 a barrel jumping surging $3.24 to $108.66 a barrel on Monday. Meanwhile, after slipping $3.90 to $4,558 ounce in the previous session, gold futures are dipping $12 to $4,546 an ounce.
On the currency front, the U.S. dollar is trading at 159.12 yen compared to the 158.83 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is trading at $1.1618 compared to yesterday's $1.1655.
Asia
Asian markets turned in a mixed performance on Tuesday as technology heavyweights tracked overnight declines in their U.S. peers.
Oil prices eased but remained at elevated levels after Tehran reportedly sent a new peace proposal via Pakistan and U.S. President Donald Trump said he has postponed a planned attack on Iran at the request of Qatar, Saudi Arabia and the United Arab Emirates. Trump said "serious negotiations" are underway to end the war.
Gold fell toward $4,550 an ounce as Treasury yields edged up and the dollar steadied after a decline in the previous session on expectations that the Federal Reserve will keep interest rates higher for longer.
China's Shanghai Composite Index climbed 0.9 percent to 4,169.54 and Hong Kong's Hang Seng Index closed up 0.5 percent at 25,797.85.
Standard Chartered shares rallied 2.3 percent in Hong Kong after the banking giant announced it would cut more than 15 percent of its corporate functions roles by 2030.
Japanese markets ended slightly lower as technology stocks followed their U.S. peers lower ahead of Nvidia earnings. Banks advanced, helping limit overall losses in the broader market.
The Nikkei 225 Index gave up early gains to close 0.4 percent lower at 60,550.59. The broader Topix Index rose by 0.6 percent to 3,850.67 as government bond yields fell across the curve and data showed the Japanese economy grew faster than expected in the first quarter.
Seoul stocks tumbled as foreign-selling spree of major technology stocks continued. The Kospi plunged 3.3 percent to 7,271.66. Samsung Electronics shares fell nearly 2 percent, SK Hynix lost 5.2 percent and SK Square plummeted 6.7 percent.
Australian markets bounced back from a more-than-one-month low, with financials, retail and healthcare stocks leading the surge. The benchmark S&P/ASX 200 Index rallied 1.2 percent to 8,604.70, while the broader All Ordinaries Index settled 1.1 percent higher at 8,829.50.
Mineral Resources jumped 2.6 percent after the miner said it would spend about AU$20 million to restart its Western Australia site.
Across the Tasman, New Zealand's benchmark S&P/NZX-50 Index jumped 1.7 percent to 12,974.32, snapping a five-session losing streak.
Europe
European stocks have moved mostly higher on Tuesday after U.S. President Donald Trump said there was a "very good chance" the United States could reach an agreement with Iran to prevent Tehran from obtaining a nuclear weapon.
Oil prices fell nearly 2 percent on Trump's comments and bonds steadied after a recent sell-off, helping underpin investor sentiment.
The British pound slipped after official data showed the U.K. unemployment rate increased slightly in the three months to March.
The jobless rate stood at 5.0 percent in the January to March period, up from 4.9 percent in the previous three-month period.
The number of unemployed people totaled 1.806 million compared to 1.780 million in the December to February period.
The German DAX Index is up by 1.3 percent, the French CAC 40 Index is up by 0.7 percent and the U.K.'s FTSE 100 Index is up by 0.5 percent.
LSEG shares have jumped. The London Stock Exchange operator has announced a renewal of its long-standing technology partnership with Broadcom.
Dr. Martens has also soared. The shoemaker posted a better-than-expected 61 percent jump in full-year adjusted pre-tax profit.
Specialist distribution group Diploma Plc has also surged after reporting solid half-year earnings and raising its guidance.
Food packaging specialist Hilton Food has also moved sharply higher after affirming its full-year adjusted pre-tax profit outlook.
Stellantis has also risen. The Dutch auto conglomerate said it would begin production of its E-Car project of small and affordable electric vehicles in 2028.
Sanofi has also moved to the upside. The French drugmaker said a trial showed its rare disease therapy performed better in raising key lung protein in patients with a genetic form of lung disease.
Swedish technology company Lagercrantz has also soared after posting better-than-expected quarterly earnings.
Defense firm Saab has also advanced after Sweden said it would order four navy frigates from France's Naval Group in a $4 billion deal.
U.S. Economic News
The National Association of Realtors is scheduled to release its report on pending home sales in the month of April at 10 am ET. Pending home sales are expected to increase by 0.9 percent in April after jumping by 1.5 percent in March.
At 7 pm ET, Philadelphia Federal Reserve President Anna Paulson is due to speak before a dinner at the Federal Reserve Bank of Atlanta 2026 Financial Markets Conference.
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May 15, 2026 15:25 ET Apart from the confirmation of Kevin Warsh as the next Fed chair, the main news on the economics front this week included key price data from the U.S. and the first quarter economic growth figures from major economies. Both consumer prices and producer costs have started to reflect the effect of supply shocks due to the Middle East conflict. In Europe, GDP data was in focus, while inflation data from China dominated the news flow in Asia.