By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) -- U .S. stock futures pointed to a lower
open for Wall Street on Tuesday, with technology stocks setting up
for another day of risk-off selling, as investors looked ahead to
the start of the Federal Open Market Committee meeting and
potential for hawkish talk.
Futures for the Dow Jones Industrial Average (DJZ4) fell 24
points to 16,919, while those for the S&P 500 index (SPZ4)
eased 1.7 points to 1,974.40. Futures for the Nasdaq-100 index
(NDZ4) fell 7.75 points to 4,017.75.
The data of note Tuesday are producer prices for August, due at
8:30 a.m. Eastern Time. But most investors will be focused on the
start of the two-day Federal Open Market Committee policy
meeting.
Tech and small-cap stocks led a mostly losing day on Wall Street
on Monday, with the Nasdaq Composite (RIXF) dropping 1.07% as
investors turned risk-averse ahead of the Fed meeting. Analysts are
looking for a change in the Fed's language that could signal
sooner-than-expected rate hikes.
Alain Bokobza, global head of asset allocation at Societe
Generale, and his team on Tuesday advised investors to "switch out
of expensive, illiquid and over-owned assets," rotating out of
small caps and into large-caps in the U.S. and Europe. "As the Fed
continues to normalize its monetary policy, small caps are at risk
of a large correction," he said.
Data compiled by Bloomberg News showed 47% of stocks in the
Nasdaq Composite are down at least 20% from their peak in the last
12 months, and more than 40% have fallen by as much in the Russell
2000 index (RUT)(RUT)(RUT). Meanwhile, the S&P 500 index has
logged 33 new closing highs this year, and less than 6% of
companies are in what's considered bear-market territory, Bloomberg
reported Monday.
Stocks to watch: Majesco Entertainment Co. (COOL) could follow
up a 20% drop in late trading on Monday when the videogame maker
posted a deeper-than-expected third-quarter loss.
Oxygen Biotherapeutics Inc. (OXBT) could add to a 21%
late-session tumble. The drug company said its board had voted to
stop a current mid-stage clinical trial for its traumatic brain
injury treatment Oxycyte.
Tesla Motors Inc. (TSLA) fell hard on Monday after Morgan
Stanley said the electric-car maker's stock is overvalued. But Trip
Chowdhry at Global Equities Research advised in a note Tuesday that
investors buy Tesla on weakness, as he reiterated an overweight
rating and a 12-to-18-month price target of $385.
Other markets: Asian stocks were generally lower. China's
largest wireless carrier China Mobile Ltd. tumbled 3.8% at the
close, after reports said the release date for iPhone 6 in mainland
China is still uncertain. Data out of China also showed foreign
direct investment in August falling to a four-year low, on the
heels of weak factory data over the weekend.
A disappointing German economic sentiment survey did already
weak Europe stocks no favors. Among currencies, the Russian ruble
(USDRUB) continued its decline against the U.S. dollar, down
another 1% as concerns over fresh sanctions weighed. Gold(GCZ4)
rose on the heels of Monday's first win in five sessions.(RUT)
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