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Dow futures spike after huge selloff

U.S. stock index futures pointed to a sharply higher open on Tuesday, recovering from the plunge seen in global stocks on Monday as mayhem in Chinese markets and interest rate fears dominated markets.

Dow futures rose 500 points in premarket trading, implying a 366 point bounce at the open and shrugging off deeper selling in China. Equity markets in China fell further in the final hour of trading on Tuesday, with the Shanghai Composite settling below the key 3,000 mark, to end the day down 7.6 percent.

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Japan's Nikkei 225 index was the second-biggest laggard in the region, closing down 4 percent, after turning negative in the afternoon trading session Tuesday.

European equities bucked the weakness seen in Asia, and were trading firmly in the green in early deals. The pan-European Stoxx 600 rallied 2.8 percent, with French, German and U.K. stocks all up around 1.5 percent. Basic resources stocks were the key outperformer, gaining in excess of 3 percent.

On the data front, there are a flurry of housing market indicators due Tuesday, with the FHFA and Case-Shiller home price indices for June both due at 9.00 a.m. ET and new home sales figures for July at 10.00 a.m. Other releases include the Conference Board's consumer confidence indicator for August at 10.00 a.m. as well as the flash Markit services and composite PMIs for the same month.

"After yesterday's data vacuum, we get U.S. new home sales and Conference Board consumer confidence this afternoon. Neither of these is going to change anyone's expectation about the outlook for Fed policy - the debate rages on between those who think the Fed should have hiked ages ago, those who expect them to raise rates this year and those who think doing so would be a catastrophic mistake," said Kit Juckes, global head of foreign exchange and macro strategist at Societe Generale.

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In earnings, Best Buy, Toll Brothers and Sanderson Farms are all due to report before the market open.

BHP Billiton reported full-year earnings earlier Tuesday which sent shares around 3 percent higher in London. This came despite the mining giant reporting an 86 percent plunge in net profit on the back of falling commodity prices, but investors cheered the group's cost-cutting measures.

It comes after stocks started Monday with one of the ugliest opening selloffs in memory, and the dramatic move in the Dow was the biggest intraday swing ever. U.S. stocks plunged more than 3.5 percent over the day, closing off session lows in high volume trade as fears of slowing growth in China pressured global markets.

S&P 500 ended nearly 80 points lower, off session lows of about 104 points lower but still in correction territory after the tech sector failed intraday attempts to post gains. Nine of the 10 sectors are in correction territory, with consumer staples less than 1 percent away.

Cumulative trade volume was 13.94 billion shares, the highest volume day since Aug. 10, 2011. Composite trade volume on the New York Stock Exchange was 6.57 billion shares, the heaviest since Oct. 27, 2011.