U.S. Stock Futures Decline Following Tech Slide

U.S. stock futures slipped after the Labor Day holiday as investors remained jittery about recent falls in giant tech stocks.Futures tied to the S&P 500 fell 0.6%, suggesting that U.S. stocks will slip after the opening bell. Tech-heavy Nasdaq Composite Index futures fell 2.5% after a bout of volatility last week led to big drops in the index.In premarket trading, shares in electric-car maker Tesla fell 10.6%. Index provider S&P Global said late Friday that it wouldn’t include Tesla in the S&P 500, which is tracked by billions of dollars in investments. Shares of other major technology companies also slipped ahead of the opening bell, with Apple retreating 3.8%,

Facebook

declining 3.5% and chip maker

Nvidia

down 5.4%.

“I think we should start to anticipate a rotation, the momentum behind tech is going to ease,” said Seema Shah, chief strategist at

Principal Global Investors.


PFG 2.12%

“As we’re seeing easing lockdowns and the prospect of a vaccine, people are beginning to go back to a more normal way of life and reliance on tech is starting to fade from the peak where it was at the height of the lockdown.”

The yield on benchmark 10-year Treasury bonds on Tuesday fell to 0.687%, from 0.720% on Friday, as some investors sought safety. The U.S. Treasury Department will issue debt with maturities ranging from 3 months to 3 years in a series of auctions on Tuesday.

Also weighing on markets Tuesday are an uptick in economic tensions between the U.S. and China.

President Trump said in a Monday press conference that he was considering “decoupling” from China and wasn’t seeking to bring outsourced jobs back to the U.S. The comments are the latest twist in a multiyear spat between the two largest economies in the world that have centered around technology, security and jobs.

“Decoupling is an economic concept not a political concept,” said Sebastien Galy, a macro strategist at Nordea Asset Management. “These have the potential to be very significant moves.”

Chinese Foreign Minister Wang Yi announced an initiative on Tuesday seeking to set global standards on data security, in response to accusations by Washington over what the Trump administration deems to be national-security threats by Chinese companies such as Huawei Technologies and Tencent Holdings.

In Asia, major benchmarks rose, with the Shanghai Composite Index and Korea’s Kospi index both closing up 0.7%. Japan’s Nikkei 225 ticked up 0.8% after the government released its revised gross domestic product figures for the second quarter, which were moderately better than economists’ expectations.

SoftBank Group

shares stabilized Tuesday, falling 0.6%, after a 7% fall on Monday. The Japanese conglomerate unsettled investors by making an outsize bet on giant tech stocks in options markets. 

Tesla’s booth at the China International Fair for Trade in Services in Beijing on Monday.

Photo:

Pan Siwei/Zuma Press

The pan-continental Stoxx Europe 600 slipped 1% as another round of Brexit trade negotiations between the U.K. and the European Union are set to begin on Tuesday. Prime Minister Boris Johnson has set an Oct. 15 deadline to strike a deal and tensions are expected to simmer in the final weeks ahead of the deadline. The pound weakened 0.2% against the euro.

“Sterling is definitely under short-term pressure,” said Russell Silberston, investment strategist at Ninety One. “If the range of possible outcomes suggests we are going to move toward a hard Brexit, I wouldn’t be surprised to see the euro rally and the sterling fall.”

The German benchmark DAX index was 0.8% lower. German exports for July rose 4.7%, indicating that the trade-dependent country’s economy is recovering, albeit a little more slowly than anticipated. Economists were predicting a 5% increase.

“German exports continue to play catch up with the rest of the economy,” said Carsten Brzeski, chief economist for the eurozone at ING. But “the German export sector is still suffering from structural challenges including trade tensions, Brexit and global supply chain disruptions as well as difficulties among its main trading partners to cope with the virus.”

Oil prices extended their drop after Saudi Arabia signaled an expectation for reduced demand over the weekend by cutting prices. Global benchmark Brent crude slipped 1.7% and traded at $41.30 a barrel. The U.S. WTI retreated 3.8%.

In European equities,

easyJet

fell over 7% after the budget airline said it expects to cut flights in response to the U.K. government adding more countries to its quarantine list. British mail carrier company

Royal Mail

surged 18.3% after it said revenues were up by a third on an increase in parcel deliveries.

Investors will also be awaiting earnings releases from

Slack Technologies,

the business chat-software developer, which will report after the market closes along with athleisure brand

Lululemon Athletica.

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com

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