The Dow Jones Industrial Average suffered seven straight sessions of losses, while the S&P 500 and Nasdaq saw five straight negative sessions. All three benchmarks have fallen in nine of the past ten trading days.
Market sentiment is so negative that the S&P 500 could retest the psychologically important 1,000-point level even though there are positive fundamental factors, Keith Wirtz, president and CIO at Fifth Third Asset Management, told CNBC.
European shares bounced back from a six-week low with mining stocks leading the gains, while Chinese stocks led the major Asian indexes to a higher close Tuesday.
On the economic front, the Institute for Supply Management releases its monthly non-manufacturing index at 10 am New York time. Economists are forecasting a reading of 54.9 for June, a slight drop from the May reading of 55.4.
The Reserve Bank of Australia gave an upbeat assessment of the global economy along with its decision to keep interest rates on hold for a second month. The economic view sparked short covering for higher-risk currencies like the euro, and helped push the dollar broadly lower. An early rebound in overseas stock markets and that upbeat economic assessment from Australia are among the factors helping oil reverse early losses.
Forecasters are watching a new storm system over the Gulf of Mexico that could strengthen into a tropical storm and hamper cleanup efforts for the massive BP oil spill. Separately, BP is reportedly mulling the sale of a stake to raise cash and ward off any takeover bids. That's helped push BP shares higher in overseas trading.
Shares of BP were higher in London trading, but closed slightly lower in New York trading on Friday.
Meanwhile, News Corp is in talks with Google, Microsoft, and Yahoo about advertising on MySpace, as an existing contract with Google comes to an end, according to the Wall Street Journal.