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A mix of profit-taking, particularly in the technology sector, and anxiety over U.S. interest rates, was the key driver of steep losses on Wall Street during the session.
But index futures signaled some stability in stocks, with focus turning to more cues on monetary policy.
S&P 500 Futures rose 0.1% to 5,088.75 points, while Nasdaq 100 Futures rose 0.2% to 17,964.50 points by 18:22 ET (23:22 GMT). Dow Jones Futures inched up to 38,622.00 points.
Powell is widely expected to maintain a hawkish tilt during a two-day testimony on Wednesday and Thursday.
His testimony follows a series of warnings from Fed officials that sticky inflation will keep the central bank from considering any near-term reductions in interest rates.
Recent data also showed that the U.S. economy remained relatively resilient, giving the Fed more headroom to keep rates higher for longer. Nonfarm payrolls data due on Friday is set to provide more cues on that front.
Still, analysts expect the Fed to have enough cues on when to reduce rates by June, with expectations for a June cut remaining in play.
Anxiety over Powell saw the S&P 500 slide 1% to 5,078.65 points on Tuesday, while the NASDAQ Composite tumbled 1.6% to close at 15,939.59 points. The Dow Jones Industrial Average fell 1% to 38,585.19 points.
Losses in major technology stocks were the biggest weigh on Wall Street, with the sector remaining extremely vulnerable to profit-taking after a strong melt-up through February.
Questions over the sustainability of a recent artificial intelligence-driven rally also factored into market losses. Analysts at Sevens Group said that much of the fourth quarter rally will “be in jeopardy,” especially if AI does not turn out to be a major change for businesses.
Among after-hour movers, cybersecurity firm CrowdStrike Holdings Inc (NASDAQ:CRWD) jumped 23.5% on consensus-beating quarterly earnings and guidance. Gains in the firm also pulled its peers, including Palo Alto Networks Inc (NASDAQ:PANW), Zscaler Inc (NASDAQ:ZS) and Fortinet Inc (NASDAQ:FTNT) up between 3% and 4%.
On the other hand, luxury department store chain Nordstrom Inc (NYSE:JWN) fell 9% after its annual earnings forecast underwhelmed.
