European stocks dropped on Tuesday as traders look for a new catalyst after the big rally from the depths of March.

Down two of the last three sessions, the Stoxx Europe 600

fell 1.5%.

The finance sector struggled, with Natixis
Legal & General

and Société Générale


The German DAX
French CAC 40

and U.K. FTSE 100

all dropped sharply.

The U.S. S&P 500

on Monday turned positive for the year. Investors appear to be betting that even if the coronavirus spread accelerates, governments won’t be as strict as they were initially. The World Health Organization on Monday said it is very rare for asymptomatic people to spread the virus.

The U.S. Federal Reserve, after European markets had closed, loosened the terms of its still inactive Main Street Lending Program. The Fed will decide its latest move on interest rates on Wednesday.

“No change to policy is expected, but markets will assess for how long current policy settings will be in place and the likelihood of further stimulus despite the unexpected payrolls rebound in May,” said Hann-Ju Ho, senior economist for commercial banking at Lloyds Bank.

German exports fell a record 24% in April, while the Bank of France’s survey of the manufacturing and construction sectors improved sharply in May.

Of stocks in focus in Europe, cigarette maker British American Tobacco


fell 4% after reducing its earnings and sales guidance for the year, blaming a 3% revenue drag due to lower international travel.

U.K. engineering group Aveva

rose 4%, after reporting a 23% rise in adjusted operating profit on 9% revenue growth and maintaining its dividend payment.

Futures on the Dow Jones Industrial Average

fell 319 points.

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