Dow Futures Fall as Nasdaq Hits 2-Year Low; Treasury Yield Approaches 4%

The stock market was sliding again on Tuesday morning, with futures pointing lower across the board as investors absorbed the weight of a Nasdaq that had just hit its lowest point in two years. The tech-heavy index had fallen 1% on Monday, breaking through its June low—the previous floor of the bear market—and dipping below levels not seen since July 2020. That move killed what had been a tentative rally attempt that started in early October, a technical signal that matters to traders watching for signs of stabilization.

The broader market was showing cracks too. The S&P 500 had lost 0.75% on Monday, while the small-cap Russell 2000 shed 0.6%. The Dow Jones Industrial Average declined 0.3%. On Tuesday morning, before the opening bell, Dow futures were down 0.15%, S&P 500 futures had fallen 0.3%, and Nasdaq 100 futures were off 0.4%. The weakness was broad: chipmakers and oil-related stocks were leading the declines.

Bond markets were sending their own signal. The 10-year Treasury yield had climbed to 3.93% by Tuesday, up from 3.88% on Friday, and was again approaching the 4% threshold it had tested in late September. That rising yield reflects the Federal Reserve's campaign to fight inflation by keeping interest rates elevated, a policy that pressures stock valuations and makes borrowing more expensive across the economy. Meanwhile, oil prices had dropped about 2%, sending West Texas Intermediate futures back below $90 a barrel after a five-day rally that had been fueled by OPEC+ announcing plans to cut monthly output by two million barrels per day in November.

Earnings season was about to begin in earnest. PepsiCo was set to report Wednesday morning, followed by major results from JPMorgan, UnitedHealth, and Walgreens Boots Alliance later in the week. These reports could shift sentiment, though the market was already bracing for economic headwinds. American Airlines had climbed more than 3% after raising its third-quarter revenue growth outlook ahead of its October 20 earnings date, suggesting at least some companies were finding reasons for optimism. But Zoom Video Communications fell more than 3% after Morgan Stanley downgraded the stock, citing a lack of near-term catalysts. Tesla, the electric-vehicle leader, traded 1% lower, extending losses that had left the stock about 46% below its 52-week high and sharply below both its 50-day and 200-day moving averages.

Among the blue-chip stocks, the picture was mixed but mostly weak. Amgen punched up nearly 3% after an analyst upgrade and price target increase, but Apple and Microsoft—two of the market's largest companies—were trading lower ahead of the opening bell. Apple was more than 20% off its 52-week high, while Microsoft had slid 2.2% on Monday to hit another 52-week low, now about 34% below its peak. Both were trading below their key moving averages, a sign that momentum had shifted decisively against them.

For investors, the moment presented a tactical question. Market strategists were advising that corrections like this one were the time to build watchlists of top-performing stocks, preparing for a potential follow-through day—a technical signal that would confirm a fresh uptrend. Many long-term leaders tend to break out at or near such a day, and missing that early opportunity can be costly. But there was a catch: as investors waited for that signal, stock charts could deteriorate, meaning some of the stocks on their watchlists might no longer be worth buying by the time the market turned. Updating those lists would be essential. Among the stocks drawing attention were Cardinal Health, which was building a flat base with a 72.38 buy point; ConocoPhillips, which had fallen below a 118.49 buy point; Denbury, which had surged 6.6% after reports that Exxon Mobil was considering a takeover; and Vertex Pharmaceuticals, which was shaping a flat base with a 306.05 buy point. The S&P 500's rally attempt remained technically intact, even as the Nasdaq's had been killed, leaving open the possibility that a follow-through day could still materialize on that index.