US pre-open: Stocks heading lower again after two upbeat sessions

US futures pointed to a downbeat session on Wall Street on Tuesday following two days of gains, as investors looked ahead to key inflation data due on Wednesday.

At 1150 GMT, Dow Jones Industrial Average, S&P 500 and Nasdaq futures were all 0.7% lower. The three major indices ended up the day before, resuming a rally that began late on Friday as investors stepped in to snap up some bargains after worries about inflation and higher interest rates sparked a selloff last week.

But stocks looked set to drop again as caution set in ahead of Wednesday's release of the consumer price index for January.

HSBC expects the CPI to have risen 0.2% in January, with the year-on-year rate slipping to 1.7% from 1.8% in December.

"We expect that core services prices rose around 0.25% month-on-month, with the monthly increase in rents cooling off slightly compared to previous months. We expect that core goods prices were close to unchanged in m-o-m terms, with new and used vehicle prices holding relatively steady. Meanwhile, we estimate the headline CPI increased 0.4% m-o-m in January, with average gasoline prices rising by around 5%. We expect the y-o-y headline CPI inflation rate slowed to 2.0%, down from 2.1% in December."

Data released earlier showed that small business optimism in the US improved more than expected in January.

The index of small-business optimism from the National Federation of Independent Business printed at 106.9 last month, up from 104.9 in December and beating expectations for a reading of 106.2.

NFIB President and chief executive officer Juanita Duggan said: “Main Street is roaring. Small business owners are not only reporting better profits, but they’re also ready to grow and expand. The record level of enthusiasm for expansion follows a year of record-breaking optimism among small businesses."

The number of respondents saying "now is a good time to expand" registered at 32%, marking the highest level in the history of the survey, which began in 1973.

NFIB chief economist Bill Dunkelberg said: "The historically high index readings over the last year tell us small business owners have never been more positive about the economy. This is in large response to the new management in Washington tackling the biggest concerns of small business owners - high taxes and regulations."

In corporate news, AmerisourceBergen was sharply higher in pre-market trade following reports that Walgreens Boots Alliance has approached the company about a takeover.

Elsewhere, Amazon was likely to see active trading following reports the retailer is planning to slash hundreds of jobs across its consumer business.

General Motors was likely to be in focus after saying it plans to close an auto plant in South Korea.

Investors will also be sifting through earnings from Under Armour and PepsiCo before the opening bell, while Baidu Inc and MetLife will report after the close of markets.

In addition, market participants will eye a speech by Cleveland Fed President Loretta Mester later in the day at the Dayton Area Chamber of Commerce in Ohio.