Stock futures drop as US-China tensions escalate over Pelosi’s expected trip to Taiwan

Stock futures fell on Tuesday morning as tensions escalated between the United States and China ahead of an expected visit to Taiwan by House Speaker Nancy Pelosi.

Futures linked to the Dow Jones Industrial Average were down 144 points, or 0.5%. S&P 500 futures fell 0.7%, and Nasdaq 100 futures fell 0.8%.

Reuters reported, citing sources, that Pelosi is expected to visit Taiwan and spend Tuesday night there. In the lead-up to the trip, Chinese officials threatened action as Pelosi moved forward with the visit. Pelosi became the first female speaker of the House of Representatives since Newt Gingrich in 1997 to visit Taiwan.

“We would like to tell the United States once again that China stands by it, that the Chinese People’s Liberation Army will not stand idly by, and that China will take resolute responses and strong countermeasures to defend its sovereignty and territorial integrity,” said the Chinese Foreign Ministry spokesman. Zhao Lijian said at a daily press briefing on Monday.

Merchants are also waiting for another batch of earnings from companies like Starbucks, PayPal and Advanced Micro Devices. Caterpillar Inc. reported mixed results on the Tuesday before the bell.

Tuesday’s moves came after the major averages fell on the first day of August. The S&P 500 fell 0.28% to close at 4118.63 while the Nasdaq Composite fell 0.18% to close at 12,368.98. The Dow Jones Industrial Average fell 46.73 points, or 0.14%, to close at 32,798.40. Last month, the major averages posted their biggest one-month gain since 2020.

“I think for sure the market is still a bearish bounce,” says Kevin Simpson of Capital Wealth Planning. Speaking to CNBC titled “Closing Bell: Overtime” on Monday. “…I think the way the markets traded in July was great, but I don’t think we went through any kind of capitulation. Headwinds are very rampant.

On the economic data front, investors this week Awaiting the non-farm payrolls report for July It is due to be released on Friday for more clues about the state of the economy and the labor market. More earnings data is due Tuesday with reports from Starbucks, PayPal, Caterpillar, Advanced Micro Devices and more.