In recent weeks, concerns around North Korea have subsided as tensions appeared to have eased between the country and the West.
On Tuesday however, Japan's Prime Minister Shinzo Abe told reporters that a ballistic missile which was fired by North Korea had passed over Japan. Abe has since stated that the missile posed a grave threat to the country of Japan, and that he would ask the United Nations to ramp up the pressure on Pyongyang.
Markets worldwide showed signs of nervousness, with investors turning to safe-haven assets. Futures in the U.S. pointed to a negative open on Tuesday, while markets in Asia and Europe fell deep into the red on the back of the geopolitical news.
Aside from North Korea, domestic politics will be of key importance as President Donald Trump heads to Texas on Tuesday amidst the flooding that is causing chaos in Houston. Investors will also be looking for how the U.S. incumbent will respond to recent reports about his presidency and how he will handle North Korea.
Investors stateside are likely to keep a note of how much of an impact Hurricane Harvey will have on the energy sector, as well as other businesses such as insurance, after several businesses and refineries had to temporarily shut due to the natural disaster.
On the data front, consumer confidence hits 122.9 in August versus expectations of 120.3. The major indicator of consumer optimism rose in July to 121.1, a 16-year high.
The Treasury Department auctioned $28 billion in 7-year notes at a high yield of 1.941 percent. The bid-to-cover ratio, an indicator of demand, was 2.46.
Indirect bidders, which include major central banks, were awarded 68.8 percent. Direct bidders, which includes domestic money managers, bought 16.6 percent.
—CNBC's Christine Wang and Christopher Hayes contributed to this report.
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