US Markets

Wall Street set to sell off as oil holds near lows

Stocks set to slump again at open
VIDEO1:4301:43
Stocks set to slump again at open

U.S. stock index futures indicated a sharply lower open on Thursday, with Dow futures down as much as 160 points, as oil prices extended losses and investors digested Wednesday's Fed minutes and more volatility in Chinese markets.

Wednesday's Fed minutes left the markets wanting, with enough nuance to keep Wall Street divided over whether the first rate hike comes in September or later.

That means the scrutiny of each piece of data, and particularly job-related or inflation data, will be intense.

Initial claims data came in at 277,000, but remained consistent with an improving labor market trend that could support a rate hike this year.

The U.S. 2-year Treasury note yield near 0.66 percent, while the 10-year yield trimmed losses to trade near 2.11 percent.

The U.S. dollar traded slightly lower against major world currencies, with the euro above $1.11.

Existing home sales, the Philadelphia Fed survey and leading indicators are all released at 10 a.m. ET.

Read MoreFed watch: The great debate rages on

The Philly Fed survey will be key, after the Empire State survey earlier in the week plunged to a 2009 low.

In oil markets, Brent crude traded at just under $47, down more than 1 percent, while U.S. crude hovered near $41 a barrel, recovering from a fresh six-and-a-half-year low near $40.

Traders were also keeping an eye on a range of U.S. jobs data and China's continuing rollercoaster ride, with the benchmark Shanghai Composite closing 3.4 percent lower, down 128.53 points.

On the earnings front, Madison Square Garden, Sears Holdings and The Buckle were scheduled to report before the bell.

Sears lost an adjusted 67 cents per share for its latest quarter, smaller than the loss of $2.50 estimated by the lone analyst providing an estimate. Profit margins improved at both the Sears and Kmart chains, but same-store sales declined.

Walt Disney—Bernstein downgraded Disney to "market perform" from "outperform," saying valuations for media stocks need to be adjusted because of an increased risk premium regarding affiliate fees.

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Hewlett Packard, Gap, Intuit, Marvell Tech, Ross Stores, Salesforce.com and Fresh Market are all due after the bell.

In Europe, the pan-European Stoxx 600 index was 1.3 percent lower, with investors taking in the latest Fed minutes and concerns over Chinese growth continuing.

—CNBC's Peter Schacknow and Patti Domm contributed to this report