MARKET SNAPSHOT: U.S. Stocks: Futures Driven Lower As Bond Markets Are Battered

By Carla Mozee, MarketWatch

U.S. stocks may drop sharply when Wall Street opens Tuesday, as equity futures were under heavy pressure, with a selloff in bond markets calling the shots.

Futures for the Dow Jones Industrial Average (YMM5) dropped 146 points, or 0.8%, to 17,876, and those for the S&P 500 (ESM5) fell 16 points, or 0.8%, to 2,082. Nasdaq futures (NQM5) were down 39 points, or 0.9%, at 4,392.25.

A downward move would extend Monday's losses for U.S., and investors on Tuesday may see another drive lower in U.S. bond prices following the battering European bonds were taking. The widely watched yield on Germany's 10-year Bund was pushed above 0.7% early Tuesday. Bond and yields move inversely.

"Wall Street is being pulled around by the sentiment on the bond markets. The latest rise in Treasury yields is adding to pressure on equities. Again with little on the economic calendar today, we could see this continue," said Richard Perry, market analyst at Hantec Markets, in a note.

U.S. bond yields on Monday hit their highest level since early December (http://www.marketwatch.com/story/treasury-prices-decline-as-eurozone-bond-market-resumes-selloff-2015-05-11). The yield on the 10-year Treasury note on Monday climbed to 2.267%, according to Tradeweb.

Data: Economic reports on Tuesday's docket include the 9 a.m. Eastern Time release of a small-business optimism index by the National Federation of Independent Business. At 10 a.m., the Labor Department is set to release figures on March job openings.

The Federal Reserve's report on first-quarter household debt and credit is slated for release at 11 a.m. Eastern.

Federal Reserve member John Williams will give his assessment about the prospects for the U.S. economy at a 12:45 p.m. speech at the NY Association for Business Economics in New York. In a CNBC interview Monday, Williams said the first quarter wasn't as weak as it appears (http://www.marketwatch.com/story/feds-williams-finds-a-reason-to-be-cheerful-about-first-quarter-2015-05-11).

Stocks to watch: Online real-estate services firm Zillow Group Inc. (ZILLOW.XX) is forecast to report a first-quarter loss of 12 cents a share, according to a FactSet consensus estimate.

Drug distribution company McKesson Corp. (MCK) is expected to post fiscal-fourth-quarter profit of $2.74 a share.

Late Monday, Rackspace Hosting Inc. (RAX) shares fell more than 10% as the cloud-based, web-hosting company's second-quarter revenue outlook was below Wall Street estimates (http://www.marketwatch.com/story/rackspace-shares-drop-after-revenue-miss-outlook-2015-05-11).

Gap Inc. (GPS) dropped more than 2% Monday evening after the clothing retailer's first-quarter revenue missed FactSet analysts' estimates.

Other markets: In Asia, the Shanghai Composite fell 1.1%, but Japan's Nikkei Average edged up about 4 points. In Europe, the Stoxx 600 stumbled 1.4%. Greece worries intensified after the finance minister said the country may run out of cash in two weeks.

The dollar (DXY) fell against its rivals and gold prices (GCM5) were modestly higher. Oil futures (CLM5) shot higher, trading above $60 a barrel.

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