Futures on the Dow Jones Industrial Average dropped more than 450 points and indicated a loss at the open of more than 500 points. S&P 500 futures lost 1.5%. Nasdaq futures also pointed to a lower open.
Traders were focused on the strange happenings with oil futures once again, which raised concern about deep losses for the energy industry hitting the U.S. economy even further. On Monday, the May contract for oil futures expiring Tuesday fell to zero and then went to an actual negative price, meaning producers would pay for someone to take the oil off their hands. The bizarre move has to do with the fact that because of the coroanvirus shutdowns, big buyers of oil like refineries don't need any more oil because their tanks are nearly filled.
That May contract remained deep in negative price territory on Tuesday.
More concerning to traders on Tuesday was the selling now occurring in later month contracts for oil futures. The more actively traded June oil contract was down nearly 20% to $16.44 Tuesday morning. That contract expires on May 19.
The United States Oil Fund, an exchange-traded security for the retail investors which buys oil futures, tanked 19% to just $3.02 in premarket trading.
Major oil stocks like Exxon Mobil were hit again in premarket trading. Exxon was down 4%.
Not helping sentiment were shares of IBM, which slipped 3.7% in premarket trading after the company reported a 3.4% decline in revenue in the first quarter from a year ago amid the spread of coronavirus. Coca-Cola, Netflix, and Chipotle are on deck to report earnings on Tuesday.
Stocks dropped on Monday to start another likely volatile week, with the Dow falling nearly 600 points, as an unprecedented plunge in oil prices weighed on investor sentiment.
Late Monday, President Donald Trump said he would sign an executive order to temporarily suspend immigration to the United States to protect jobs "in light of the attack from the Invisible Enemy." Millions of Americans have filed for unemployment benefits as the coronavirus pandemic shuts down economic activity in much of the country.
Trump's tweet did not provide specifics on what the order would entail.
Earlier Monday, the Senate failed to reach a deal on the next package to rescue an economy and health care system ravaged by the global pandemic. However, a vote is set up as soon as Tuesday afternoon to replenish a key small business aid program.
Investors continued to monitor the coronavirus pandemic and the country's plan to reopen the economy. Signs have emerged that New York is past the worst of its outbreak. Georgia on Monday rolled out aggressive plans to reopen the state's economy, calling for many businesses to reopen their doors as early as Friday.
Stocks enjoyed their first back-to-back weekly gains since early February as investors grew more optimistic that the pandemic is easing off. The S&P 500 is now about 17% from its record high on February 19, cutting about half of its losses during the coronavirus sell-off.
"Market volatility remains intense, as subtle changes in the tone of the news drives dramatic shifts in investor sentiment," said Mark Hackett, Nationwide's chief of investment research. "Markets rallied sharply last week on hope that the worst of the outbreak is behind us. This optimism is likely to face headwinds, as the reopening of the economy is heading for an intense debate."