Wall Street will open lower on Tuesday as oil prices continue to slide and investors grow increasingly concerned about increasing supplies and weaker demand. Oil prices dropped 4% as hopes for a deal between Russia and OPEC on reducing output faded. Goldman Sachs also said that an emergency meeting was “highly unlikely”. Since June 2014, oil has tumbled over 70%.
Exxon (XOM) eased 2.75% in pre-market trading after reporting a staggering 58% decline in quarterly profits.
There were also concerns about an economic slowdown led by China and the pace of the Federal Reserve’s rate hikes in 2016. So far, the S&P 500 has lost 5.1%.
In addition, consumer spending has failed to increase, as consumers in the U.S. have chosen to boost their savings and pay down debt rather than purchase big-ticket items.
Fourth-quarter earnings on the S&P 500 are expected to have dropped 4.1% from the previous year.
Yahoo (YHOO) and Chipotle (CMG) are both expected to report their results after the market closes today.
The Dow e-minis fell 134 points (0.82%) with 42,186 contracts traded. The NASDAQ 100 e-minis were also down 34.5 points (0.8%) on 46,491 contracts changing hands. The S&P 500 e-minis lost 16.5 points (0.5%) on volume of 297,110 contracts.
Investors expect that the U.S. Federal Reserve will cut back on the number of rate hikes it will impose this year. Currently, they are betting on a 17% chance that the Fed will increase rates in March, according to recent surveys.
Stanley Fischer, Fed Vice Chairman, gave a speech on Monday that eased some investor concerns about the pace of future rate hikes. Fischer acknowledged that the economy in the U.S. could suffer and inflation could remain too low if markets continue to be volatile.
Alphabet (GOOG) soared 5% to trade at $810 just one day after the company announced that its profits beat estimates. Alphabet has now surpassed Apple (AAPL) in value, making it the most valuable company in the U.S. Apple fell 1.2% to $95.26 on the news.
Michael Kors (KORS) shares were up 18.8% to $48.05 after reporting a smaller than expected decline in its quarterly sales.