Stock index futures pointed to a weaker open Tuesday after China's central bank raised key rates for the second time in just over a month and as a handful of earnings reports disappointed.
The timing was a surprise, coming on the final day of the Lunar New Year holiday, but investors have long expected more monetary tightening as Beijing struggles to rein in price pressures and ward off a property bubble.
Gold prices edged above $1,360 an ouncedespite China's rate rise, while oil slipped below $87 a barrel.
A burst of merger activityand upbeat corporate profit outlooks had boosted investor confidence in the previous session with the Dow and S&P 500 hitting fresh 2-1/2 year highs.
The Federal Reserve should seriously consider pulling back on its $600 billion stimulus program given stronger growth and a brighter jobs picture, said Richmond Fed President Jeffrey Lacker at a business gathering at the University of Delaware.
Despite a report last week showing only 36,000 jobs were created in January, Lacker said other measures were pointing to a firmer economic recovery and better employment prospects.
"An array of forward-looking indicators of employment trends point to continued labor market improvement," said Lacker.
There are a host of other Federal Reserve speakers scheduled throughout the day: Atlanta Fed President Dennis Lockhart speaks at 12:30 pm ET, and Dallas Fed President Richard Fisher speaks at 1:30 pm ET.
In the day's earnings news, Toyota reported a 47.6 percent drop in quarterly profit, hit by slumping Japanese car sales and a firm yen that underlied its exposure to loss-making exports, but lifted its forecast as cost cuts kicked in.
Meanwhile, ArcelorMittal reported a quarterly loss, but the world's largest steel maker predicted 2011 will be better than 2010.
And Swiss bank UBS said it expects to win back more business from clients in 2011and has laid the foundations for a rebound in its investment bank.
Sara Lee reported earnings that missed Wall Street estimates by a penny, as the weaker euro hurt sales.
With more than half of the S&P 500 companies' quarterly results in, 72 percent have beat expectations.
Disney , McAfee and Take Two are expected to report earnings after-the-bell tonight.
Meanwhile, McDonald's said global sales at established restaurants climbed 5.3 percent in every region except the U.S., where sales were only up 3.1 percent. Wall Street expected global sales and U.S. sales each to rise 4.4 percent.
Intel said it will resume shipping known configurations of a flawed chipset that work for use with its new processors. The action was in response to demands from personal computer makers that will use the chips selectively.
