U.S. stock index futures pointed to a sharply lower Wall Street open on Tuesday, as global stocks declined on the back of a sharp fall in bond prices.
Dow Jones Industrial Average futures nearly halved losses, after earlier falling about 140 points, as benchmark 10-year Treasury bonds yielded over 2.3 percent for the first time in five months.
"The selling pressure is probably predicated on the rise in interest rates," said Robert Pavlik, chief market strategist at Boston Private Wealth, citing ongoing concerns about Greece and U.S. equity valuations as other negative factors.
Greece emptied an emergency IMF holding account to repay 750 million euros ($839 million) due to the international lender, a Greek central bank official said in a Reuters report. The move avoided default but underscored the dire state of the country's finances.
Little major economic data is due on Tuesday, with the Job Openings and Labor Turnover Survey in the morning and the federal budget for April, which is seen showing an increased surplus, expected at 2:00 p.m. ET.
U.S. small business confidence increased in April with owners in the energy field surprisingly bullish about capital expenditure and hiring plans, further supporting views that economic growth is rebounding after a dismal first quarter, Reuters said. The National Federation of Independent Business said its Small Business Optimism Index rose 1.7 points to 96.9 last month.
William Dudley, president of the New York Federal Reserve and an ally of Fed Chair Janet Yellen, said on Tuesday that he did know when interest rates would rise. However, he applauded the apparent consensus between markets and the Fed that it would happen later this year.
Rising oil prices were also in focus on Tuesday, as Goldman Sachs warned that the rally was premature.
In stock news, Castleton Commodities International will buy Morgan Stanley's physical oil business in a long-awaited deal.
The government said MetLife's suit fighting its so-called "SIFI" designation should be dismissed. The insurer earlier this year challenged the decision to designate it as systemically important and subject to tighter scrutiny. The Justice Department said MetLife is "significantly interconnected" with other financial companies.
—CNBC's Peter Schacknow contributed to this report.