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NYSE invokes Rule 48 again to smooth market open

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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.

The New York Stock Exchange invoked Rule 48 for the second day in a row, Dow Jones reported.

The exchange used the rule before Monday's open after futures for several major averages hit limit down.

Before this week, Rule 48 was most recently invoked in January 2015. In all, Rule 48 has been invoked 67 times since it was approved in 2007, according to an NYSE spokeswoman. The goal of the rule is to ease market volatility.

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Dow futures briefly rose more than 600 points in premarket trading, implying a more than 450-point bounce at the open and shrugging off deeper selling in China's mainland stock market.

Read MoreMore selling may be ahead, but bull market called not dead yet

Trader on the floor of the New York Stock Exchange.
Brendan McDermid | Reuters

Futures extended gains after the Chinese central bank announced plans to cut its one year lending rate to 4.6 percent, which the People's Bank of China said was provide long-term liquidity and help support the economy.

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.

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.

, trading firmly in the green. The pan-European Stoxx 600 surged over 4 percent, with French, German and U.K. stocks all up between 3.5 and 4.5 percent. Basic resources stocks were the key outperformer, shooting around 7 percent higher.

On the data front, there are a flurry of housing market indicators due Tuesday, with the Case-Shiller home price indices for June showing home prices rose less than expected.

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 reported before the market open.

Best Buy beat estimates by 15 cents with adjusted quarterly profit of 49 cents per share, with revenue also beating forecasts. Same-store sales rose 2.7 percent, compared to the Thomson Reuters forecast of a 1.0 percent increase.

Luxury homebuilder Toll Brothers reported a 12 percent rise in third quarter orders. Earnings and revenue were roughly in line with estimates, although profits were down from a year earlier.

Poultry producer Sanderson Farms posted earnings that fell substantially shy of the $2.90 consensus estimate with quarterly profit of $2.27, while revenue was also below forecasts. The company said a key factor in the quarter's results was continued pricing pressure.

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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.

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.

CNBC's Peter Schacknow contributed to this report

Correction: This story has been updated to reflect that Rule 48 was last invoked in January 2015, not during the financial crisis, according to NYSE.