Stock market futures sold off Tuesday morning on global investor concerns about Italy's political chaos and what that could mean for the euro zone. Dow Jones futures, S&P 500 futures and Nasdaq futures signal broad losses at Tuesday's open for U.S. stock markets after the long Memorial Day weekend.
U.S. banking giants were losers, with JPMorgan Chase (JPM), Citigroup (C) and Bank of America (BAC) all down more than 1%.
Meanwhile, Chinese social media stock Momo (MOMO) is poised to break out on earnings. Investors also should pay attention to Walt Disney (DIS) and Salesforce.com (CRM).
Stock Market Futures
Dow Jones futures fell 0.9% vs. fair value. S&P 500 futures lost nearly 1% vs. fair value. Nasdaq 100 futures sank 0.8%. The 10-year Treasury yield, which topped 3.1% just a few weeks ago, has now retreated to 2.86%.
Italy Boots Global Markets
On Sunday, Italy President Sergio Mattarella rejected a populist coalition over its euroskeptic cabinet. But that heightened concerns that Italy will hold early elections that could bolster the power of populists further. The concern is that Italy, the eurozone's No. 3 economy and plagued with slow growth and high debts, could destabilize the region's economy and even the euro project itself.
Italian stocks sold off 2.7% Tuesday after tumbling 2.1% on Monday. European stocks sold off generally, with the U.K., French and German indexes down more than 1%.
The yield spread between Italian and German bonds has more than doubled over the past month. The Italian 10-year yield spiked 41 basis points on Tuesday to 3.07% while Germany's sank 7 basis points to 0.27%. Long-term yields for Portugal, Spain and Greece also have jumped sharply.
The euro continued to weaken vs. the dollar, hitting its worst levels in six months.
Meanwhile, U.S. crude oil futures fell 1.2% to $67.05 a barrel, extending Friday's sell-off. But U.K.-based Brent crude rose 0.7%.
Trump's New, New North Korea Plan
President Donald Trump, just days after calling off a June 12 summit with North Korean leader Kim Jong Un, tweeted Monday as if the meeting was back on. He followed that up with another tweet Tuesday morning.
We have put a great team together for our talks with North Korea. Meetings are currently taking place concerning Summit, and more. Kim Young Chol, the Vice Chairman of North Korea, heading now to New York. Solid response to my letter, thank you!
— Donald J. Trump (@realDonaldTrump) May 29, 2018
Momo
The Chinese social networking platform, including dating sites, reported better-than-expected earnings early Tuesday. Momo earned 69 cents a share as revenue soared 64% to $435.13 million. Analysts had expected EPS of 52 cents and revenue of $402 million, according to Zacks Investment Research.
Momo expects second-quarter revenue of $470 million to $485 million, up 51%-55% vs. a year earlier. That's well above estimates for $433 million.
Momo stock shot up 9.9% to 42.80 before the open in Tuesday's stock market trading. That suggests a breakout past a 40.55 buy point.
Walt Disney
Walt Disney's "Solo: A Star Wars Story," a standalone Han Solo origin story, had a disappointing box office debut.
"Solo" garnered some $103 million in domestic box office over the four-day Memorial Day weekend. Dow Jones component Disney had originally expected $130 million to $150 million over four days, but then slashed that estimate to $105 million to $115 million on Friday.
A disappointing "Solo" raises broader concerns about Disney's Star Wars plans. While "Force Awakens" and "The Last Jedi" were mammoth hits and quasi-standalone "Rogue One" a strong performer, "Solo" suggests that there may be Star Wars fatigue setting in.
But Disney plans several more Star Wars films, as well as multiple shows for its upcoming streaming service due next year, a rival to streaming giant Netflix (NFLX). Marvel and Star Wars movies will no longer stream on Netflix starting in 2019.
Netflix's market cap eclipsed the valuations of Comcast (CMCSA) and, slightly, Disney last week, in the latest new media milestone.
Disney was not yet active in the premarket.
Salesforce.com
The cloud-based business software pioneer reports earnings late Tuesday. Analysts expect Salesforce to report a 23% revenue gain to $2.94 billion with earnings soaring 64% to 46 cents a share.
Salesforce.com stock has retreated below a 128.97 buy point in a flat base. The stock edged lower in the premarket.
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