U.S. stock index futures were nearly flat on Tuesday as investors awaited key employment data this week, while prospects of an extended restrictive monetary policy kept Treasury yields elevated, pressuring stocks.
Investors will closely monitor the Job Openings and Labor Turnover Survey (JOLTS), due at 10 a.m. ET, while a slew of other data including the ADP National Employment numbers and the more comprehensive non-farms payrolls will also be on their radar later this week.
The S&P 500 ended flat on Monday with rate-sensitive utilities falling sharply on uncertainty over the Federal Reserve's monetary policy path, with the 10-year Treasury yield hitting 16-year highs.
"U.S. equities begin the fourth quarter as the tug-of-war between bull and bear camps remains," U.S. Bank Asset Management analysts wrote in a note.
"Persistent inflation, elevated interest rates and uncertainty over the pace of earnings growth in 2023 and 2024 remain headwinds to advancing equity prices."
At 5:30 a.m. ET, Dow e-minis were up 28 points, or 0.08%, S&P 500 e-minis were up 4.5 points, or 0.1%, and Nasdaq 100 e-minis were up 3.25 points, or 0.02%.
Fed Chair Jerome Powell said on Monday the central bank was striving to foster a sustained, strong labor market, and called for price stability.
Fed officials reiterated the need to keep interest rates restrictive for "some time" with indications of another likely hike this year.
Traders have priced in a 26% chance for a rate hike in November, while their odds for an increase in rates in December stand at 45%, according to the CME Group's FedWatch Tool.
After a stellar performance by megacaps in the first half of 2023 led by optimism over artificial intelligence, some investors believe these stocks could lose momentum as yields rise.
Megacap growth stocks were largely mixed in Tuesday's premarket trading, with Apple, Tesla and Amazon.com slipping between 0.1% and 0.6%.
Supporting sentiment, oil prices extended their decline in early trade after falling to a three-week low on Monday due to strength in the dollar, rising bond yields and mixed supply signals.
Airbnb fell 1.8% after a report said Keybanc had downgraded the vacation lodging platform's stock to "sector weight".
(Reporting by Ankika Biswas in Bengaluru; Editing by Vinay Dwivedi)
