US Markets

Wall Street on edge as Q3 earnings season gets underway


U.S. stock index futures pointed to a flat to slightly lower open on Tuesday ahead of key earnings, after stocks extended Friday's post-jobs report rally Monday, closing sharply higher.

Traders will watch market action carefully on Tuesday to see if stocks can demonstrate a successful retest of the lows ahead of what some expect to be a lackluster earnings season.

Read MoreStreet waiting for clues on bottom in stocks

Traders work on the floor of the New York Stock Exchange.
Getty Images

The earnings schedule picked up slowly with PepsiCo reporting earnings and revenue that beat expectations. Yum Brands is scheduled to report after the bell. The unofficial start to earnings season comes Thursday with Alcoa's earnings after the bell.

On the data front, the August trade deficit came in at $48.3 billion, the widest in five months.

Treasury yields turned higher, with the 10-year at 2.07 percent and the 2-year at 0.61 percent.

The dollar held slightly lower, with the euro at $1.12 and the yen at 120.35 yen against the greenback.

U.S. stocks closed more than 1.5 percent higher Monday, extending Friday's surprise intraday reversal, as investors digested the implications of the jobs data on the timing of a rate hike and awaited quarterly earnings.

All three major averages closed within 10 percent of their 52-week highs, or out of correction territory.

Read More Early movers: PEP, ABC, DD, CSCO, STRZA, BABA, FDX, SNE, AMZN & more

In Europe, stocks traded slightly higher on Tuesday following Monday's rebound, after poor industrial data out of Germany.

Shares in embattled German carmaker Volkswagen were once again in focus, down 2.1 percent after the company admitted that 8 million vehicles were fitted with the "defeat devices" that allowed them to cheat diesel emissions test in the European Union, according to a report in German newspaper Handelsblatt.

Shares in miner Glencore were off as much 6 percent after more broker downgrades, which followed a stunning rally on Monday saw the company's stock close 17 percent higher.

— CNBC's Evelyn Cheng contributed to this report