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Wall Street set to drop after two-day bounce

Stocks coming off their best two-day gains since June 2016.

US stock futures pointed to a lower open for Wall Street on Tuesday, halting two days of gains that had somewhat cooled investor nerves about a burgeoning market correction.

By 8:35 am ET (1335 GMT), Dow e-minis were down 122 points, S&P 500 e-minis were down 11.25 points, Nasdaq 100 e-minis were down 32.75 points.

The major indexes gained roughly 3% over the past two trading sessions, their best such period since June 2016 and after finishing last week with their worst performance in two years.

“We saw an impressive rebound yesterday, but by no means are we in the clear,” said Andre Bakhos, managing director at New Vines Capital LLC in Bernardsville, New Jersey.

Cleveland Fed president Loretta Mester, a voting member in the central bank’s rate-setting committee this year, said the recent stock market sell-off and jump in volatility will not damage the economy’s overall strong prospects.

She said inflation should gradually rise this year to the central bank’s two percent target, but not at a rate that requires a faster reaction from the Federal Reserve in terms of raising interest rates.

The next reading on inflation, will come with consumer prices data on Wednesday. A strong number could stoke fears over price growth and faster rate hikes – the same worries that sparked the sell-off after strong jobs data on February 2.

US 10-year Treasury yields were hovering at 2.8439%, falling back from a four-year peak of 2.9020% hit on Monday.

The CBOE Volatility Index, a widely-followed measure of short-term stock market volatility , opened at 26.94 points, after two days of relative calm. The index had jumped above 50 at the height of last week’s sell-off.

The recent pullback has wiped out all of the year’s gains for the benchmark S&P 500 and the blue-chip Dow Jones Industrial Average, which are down 0.5% and 0.7%, respectively, so far in 2018.

The tech-heavy Nasdaq was still clinging to a 1.2% gain for the year.

More than three-fifths of the companies on the S&P 500 have reported earnings, with nearly 78% of them topping profit expectations, according to Thomson Reuters data. That is above the 72 % average beat-rate in the past four quarters.

Shares of Under Armour rose more than 10% in premarket trading after the sportswear maker reported quarterly revenue that beat analysts’ estimates.

AmerisourceBergen jumped nearly 13% after the Wall Street Journal reported Walgreens made a takeover approach for the drug distributor. Walgreens fell 1.8%. 

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