Stock futures opened lower Tuesday evening to extend declines after a steep drop earlier in the day, after a weaker-than-expected print on U.S. retail sales called into question the strength of the ongoing economic recovery.

Contracts on the S&P 500 dipped. The index dropped 0.7% during the regular trading day on Tuesday to end a five-session winning streak and post its biggest decline in a month. Cyclical and reopening stocks including cruise lines and airlines sold off, and the small-cap Russell 2000 dropped 1.2%. 

"We wouldn't read too much into one day's movement in the markets. Instead, we would look at the causes for these," Tracie McMillion, head of global asset allocation strategy for Wells Fargo Investment Institute, told Yahoo Finance. "Of course, consumer sentiment out last week was negative, and then today's retail sales off, the COVID resurgence – all these things are playing on the investor psyche. And investors are probably taking some gains here given there are some uncertainties that appear to be building." 

A disappointing U.S. retail sales report from the Commerce Department served as a key source of concern for equity traders, with sales dropping 1.1% versus the 0.3% dip expected. A decline in Home Depot (HD) shares also weighed on the Dow, after the home improvement giant posted second-quarter comparable same-store sales that missed estimates. Chinese stocks including Alibaba (BABA) and Tencent (TCEHY) also renewed declines after Chinese regulators issued a fresh set of draft rules that would rein in the market power of big tech companies in the country. 

Investors are bracing for another set of potentially market-moving data and earnings on Wednesday. The next round of retailers including Target (TGT) and Lowe's (LOW) are set to report results before market open. And later in the afternoon, the Federal Open Market Committee (FOMC) will release its latest meeting minutes, offering market participants more hints on when the central bank might announce and implement tapering of its crisis-era asset purchase program. The timing and scope of the eventual roll-back of the Fed's highly accommodative monetary policies have been key questions going forward for the markets. 

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But despite some of the lingering uncertainties in markets on the Delta variant and policy fronts, many strategists remain constructive overall on the path forward for equities. 

"You're seeing a lot of economists and strategists on Wall Street now looking for some sort of catalyst here to get a sell-off, because we are going into what you would call the weaker part of the year for the market historically," Ryan Payne, Payne Capital Management president, told Yahoo Finance. "But if you look at the overall economic data, if you look at profits this quarter, it's kind of hard not to be bullish here." 

6:15 p.m. ET Tuesday: Stock futures edge lower

Here's where markets were trading Tuesday evening: 

  • S&P 500 futures (ES=F): -5.5 points (-0.12%) at 4,438.00

  • Dow futures (YM=F):-54.00 points (-0.15%) to 35,205.00

  • Nasdaq futures (NQ=F): -25.25 points (-0.17%) to 14,972.25

NEW YORK, NEW YORK – AUGUST 10: People walk by the New York Stock Exchange (NYSE) on August 10, 2021 in New York City. Markets were up in morning trading as investors look to a rare bipartisan effort in the Senate to pass a massive infrastructure bill that, if passed, will infuse billions into the American economy. (Photo by Spencer Platt/Getty Images)

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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