US pre-open: Stocks seen lower as bond yields resume their rise
US stocks looked set for losses at the open on Tuesday as bond yields resumed their march higher.
At 1215 BST, Dow Jones Industrial Average, S&P 500 and Nasdaq futures were all down 0.4%.
Meanwhile, the yield on the 10-year US Treasury note jumped to a new seven-year high above 3.25%.
"Rising rates are a double whammy for stocks - higher corporate debt costs, a lower premium to hold riskier assets against safe haven Treasuries," said Neil Wilson, chief market analyst at Markets.com.
"The question is do rates rise further from here? A confluence of factors mean US yields could continue to climb with the Fed tightening for longer, its balance sheet being reduced and a huge issuance of debt to fund the tax cuts in the US. But if anything, the US economy just looks stronger and stronger and this yield story is not a reflection of fears of it being a bubble, but of greater confidence in growth."
Over in Europe, the yield on Italy's 10-year government bond hit a new four-and-a-half year high of 3.63% as finance minister Giovanni Tria gave a downbeat assessment to parliament of the country's fiscal outlook and said he wanted to have constructive talks with the EU after the European Commission said it was concerned about Italy's budget plans.
On the US data front, the National Federation of Independent Business's small business optimism index fell to 107.9 in September from 108.8 the month before, missing expectations for a reading of 108.3.
Still, Pantheon Macroeconomics said this was "a trivial dip", leaving the index still very elevated.
"We’d be surprised to see further declines in the near-term, given the rapid pace of economic growth and the need to renew the ageing capital stock. The labour market numbers in this report are startling - the employee compensation index rose to a record high - but they aren’t new; they were released last week, ahead of the official payroll report, as usual.
"The message is straightforward; labour demand is very strong, but people are becoming very difficult to find, and labour cost pressures are intensifying."
In corporate news, Pinnacle Foods was likely to be active after the company's third-quarter sales outlook fell short of expectations.
Elsewhere, Alphabet could be in focus following a Wall Street Journal report that Google exposed the private data of thousands of users of the Google+ social network, found out about it and then decided to say nothing.