U.S. stock index futures were sharply lower Wednesday morning, as bond yields fell again triggering concerns about the economic outlook. Increasing trade tensions in the China-U.S. trade fight also weighed on markets.
Around 8:15 a.m. ET, Dow futures indicated a negative open of 174 points. Futures on the S&P and Nasdaq were also both pointing lower.
The Dow was set to add to its 4.7% decline so far in May with risk aversion increasing in recent days as bond yields dropped. The 10-year Treasury note yield, which touched a 19-month low on Tuesday, declined again in early trading Wednesday to 2.24%. A portion of the so-called yield curve further inverted as 3-month Treasury bills last yielded 2.3456%, well above the 10-year rate.
It comes at a time when the world's two largest economies are locked in a protracted trade dispute.
Washington and Beijing have imposed tariffs on billions of dollars' worth of one another's goods since the start of 2018, battering financial markets and souring business and consumer sentiment.
In the latest move, China made a veiled threat this week through state media regarding rare earth minerals, a market crucial to the U.S. technology and defense industries which China dominates.
Chipmakers, which have gotten pounded this month on fears of disrupted supply chains and lost customers due to the trade war, fell again in premarket trading Wednesday. Micron and Nvidia were lower.
Trade bellwethers Boeing and Caterpillar were also lower in premarket trading.
Italy's dispute with the European Commission over its budget, wins for europskeptic parties in EU elections and political turmoil in Austria and Greece have all added to the gloomy market outlook.
On the data front, the Richmond Fed manufacturing survey for May is expected at around 10 a.m. ET, with Dallas Fed services data set to follow slightly later in the session.
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