US pre-open: Stocks to move lower as bond yields rise

US futures pointed to a weaker open on Wall Street on Tuesday, with investors set to play catch-up with the losses seen across the pond a day earlier, amid rising bond yields.

At 1230 GMT, Dow Jones Industrial Average and S&P 500 futures were down 0.6%, while Nasdaq futures were 0.7% weaker.

David Morrison, chief market analyst at GKFX, said: "The US stock market reopens this afternoon after being closed yesterday for Presidents’ Day. A couple of hours ahead of the open the major stock indices were indicating initial weakness. The Dow futures were down over 100 points, although well above lows posted earlier in the day. Once again, investors are keeping a close eye on US Treasury bonds which have sold off recently on fears that inflation is picking up.

"The yield on the US 10-year note is back above 2.90% and dangerously close to breaking through the key 3.0% level. There are concerns that investors will rush to dump equities should borrowing costs push much higher from current levels.

"Traders will be keeping a close eye on technical levels this week for clues to where the market is heading next. If the S&P 500 can hold above 2,700 (previously resistance) then there’s a good chance of further gains. However, a break below the 100-day moving average around 2,670 opens up the possibility of a retest of support around 2,600. A break below here raises the probability of a retest of the correction low of 2,530."

In corporate news, Walmart looked set for a down day after its quarterly earnings missed analysts' forecasts.

Gannett was also likely to be in focus after it posted fourth-quarter adjusted earnings per share of 55 cents versus consensus of 46 cents.

Home Depot was poised for gains as its fourth-quarter earnings and sales beat expectations, while Qualcomm was likely to see active trading following a Wall Street Journal report that it is ready to sweeten its bid for NXP Semiconductors to around $44bn.

Elsewhere, Rite Aid rocketed in pre-market trade after Albertsons Cos said it would buy the rest of the company that Walgreens Boots Alliance isn't buying.

There are no major data points due on Tuesday, but Wednesday sees the release of the latest FOMC minutes, along with Markit's manufacturing PMI and existing home sales figures.