Investors are on edge as global market volatility continues. The Shanghai Composite dropped as much as 5.6% Tuesday before bouncing back.
U.S. stock futures were up by more than 0.5%.
The markets are coming a big drop Monday amid the continued uncertainty about China and when the Federal Reserve will ease its stimulus. The Dow Jones industrial average fell by nearly 1% Monday, while the S&P 500 and Nasdaq each lost more than 1%.
The uncertainty is reflected in a nearly 25% rise in the CBOE Market Volatility Index (VIX) so far this month.
The markets have been taking their cue from China, where stocks have been dropping based on concerns about tighter credit conditions.
But comments attributed to a People's Bank of China official helped take away some jitters. The official was quoted by several publications as saying that the bank will keep interest rates in check, and that seasonal forces that have driven them higher recently will fade.
Following the comments, the Shanghai Composite index, which was down as much as 5.6%, recovered to close just 0.2% lower.
Still, the ups and downs have analysts worried.
"Volatility is very pronounced," said Carter Worth, chief market technician at Oppenheimer, who is telling clients to start selling.
"If this kind of volatility is taking place, there is a change in the wind. That doesn't mean we are going to see a bear market or a crash, but upside is limited and downside is unknown, but very real," he said.
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Meanwhile, investors will have some fresh U.S. economic data to sift through.
The S&P Case-Shiller index, which tracks home prices in the 20 largest U.S. markets, will be released at 9 a.m. ET, and the government's report on new-home sales for May is due at 10 a.m. ET. The Conference Board releases its monthly reading of consumer confidence at 10 a.m.
On the corporate front, Barnes & Noble (BKS, Fortune 500), Carnival (CCL) and Walgreens (WAG, Fortune 500) will release quarterly earnings before the open. Gunmaker Smith & Wesson (SWHC) will release fourth-quarter results after the market closes.
European markets were making significant gains in morning trading after taking a big fall Monday. Germany's DAX index took the lead, rising by just over 1.5%.
Asian markets ended with mixed results after a volatile day. Like the Shanghai index, Hong Kong's Hang Seng also dropped during the day, but closed with a 0.2% gain. The Nikkei in Japan ended with a 0.7% loss.
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