Dow futures drop over 200 points ahead of earnings deluge, as China stocks fall

Stock futures pointed to a losing session on Tuesday, as appetite for riskier assets such as equities took a knock as a two-day rally for China’s stock market began to unravel. Investors were also braced for a heavy deluge of earnings from major companies such as Caterpillar Inc.

How are major indexes trading?

Dow Jones Industrial Average futures YMZ8, -1.27% fell 261 points, or 1%, to 25,032, while S&P 500 futures ESZ8, -1.39% fell 31.50 points, or 1.1%, to 2,725. Nasdaq-100 futures NQZ8, -1.68% slid 98.5 points, or 1.4%, to 7,057.25.

DJIA, -0.50% On Monday, Dow industrials DJIA, -0.50% dropped 126.93 points, or 0.5%, to end at 25,317.41, while the S&P 500 SPX, -0.43% shed 0.4%, to close at 2,755.88. The Nasdaq Composite Index COMP, +0.26% managed a 0.3% gain, to finish at 7,468.63.

More than 150 companies are on tap to announce financial results this week, with Caterpillar Inc. CAT, -1.99% on the docket for Tuesday, along with McDonald’s Corp. MCD, -0.51% and 3M Co. MMM, +0.76% Investors are pinning hopes that stock markets will find fresh impetus to move higher via those results.

But jittery investors were looking around at risks piling up, with China in the spotlight as the Shanghai Composite Index SHCOMP, -2.26% gave back part of a two-day rally, falling 1.3%. That is as government officials have spent the last few days trying to prop the market up with verbal encouragement for investors.

U.S. -China trade tensions are also a lingering factor for investors. On Monday, came news that two U.S. Navy warships sailed through the Taiwan Strait on Monday, but were shadowed closely by Chinese warships.

Losses weren’t just felt in China, as the Nikkei 225 tumbled 2.3% and the Hong Kong’s Hang Seng Index dropped 2%. European stock futures indicated a mixed start.