US stock index futures tumble amid concerns over Saudi journalist, trade war

U.S. stock index futures tumbled on Tuesday, as concerns over Saudi Arabia's political situation, Italy's finances and trade war fear hit risk appetite across the globe.

Investors were keeping a keen eye on U.S. corporate earnings, with industrial bellwether Caterpillar, 3M and Lockheed Martin reporting results.

Caterpillar shares fell 5.4 per cent in premarket trading after the company reported better-than-expected quarterly results, but blamed U.S. tariffs for the rise in costs.

3M Company also fell 7.1 per cent after its third-quarter sales missed estimates.

Profits of S&P 500 companies are expected to have jumped nearly 22 per cent in the third quarter, according to Refinitiv data. But many investors are focusing on the outlook for future growth due to concerns over trade, rising costs and other factors.

U.S. markets have been torn between solid earnings reports and worries about rising U.S. interest rates and global growth. The benchmark S&P 500 is on track to post its fourth day of decline, trading about 6 percent below record levels.

"There are a number of underlying risk factors in the markets right now, be it U.S. interest rates, Brexit, Italian debt, trade wars or emerging markets," Craig Erlam, senior market analyst at online forex broker Oanda, said in a note.

"These are all destabilizing factors and sentiment may finally be caving under the weight of it all."

Saudi Arabia is facing international pressure to provide all the facts about the killing of journalist Jamal Khashoggi at a Saudi consulate in Istanbul this month, adding the threat of sanctions against the kingdom to a list of market concerns.

Investors worry that it may lead to retaliation through crude oil, although a Saudi pledge to keep markets supplied held down oil prices. Chevron fell 1.3 per cent and Exxon declined 1.5 per cent.

A dispute over Italy's spending plans and doubts about the leadership of Britain's prime minister, mired in a stalemate over Brexit, means investors are focusing on the likelihood of further political turmoil in Europe.

The downbeat sentiment continued from Monday when Wall Street started the session with gains, but the S&P 500 and Nasdaq reversed course to trade lower, led by declines in financials and energy stocks.

At 7:44 a.m. ET, Dow e-minis were down 428 points, or 1.69 per cent. S&P 500 e-minis were down 43 points, or 1.56 per cent and Nasdaq 100 e-minis were down 133.5 points, or 1.87 per cent.

Even the high-flying FAANG group of stocks were not insulated from the broad-based declines. Facebook, Apple, Amazon, Netflix and Google-parent Alphabet fell between 1.5 per cent and 2.4 per cent.

Amazon, Alphabet, Microsoft and Intel are expected to report results later this week.

Harley-Davidson rose 1.2 per cent after profit topped Wall Street estimates and the company maintained 2018 shipments forecast.

(With inputs from agencies.)