U.S. stock index futures fell sharply on Tuesday, with Dow futures down more than 150 points in pre-market trade as declines in oil prices continued to weigh on investor sentiment.
European stocks were down about 1.5 percent in morning trade ET as concerns over oil prices returned to haunt markets, with oil major BP reporting an annual loss of $6.5 billion in 2015, its worst in 20 years amid the persistently low oil price. The news sent shares 6 percent lower.
Shares of Exxon Mobil fell more than 2 percent in pre-market trade after the firm reported a 58 percent drop in profit, hurt by low oil prices. The world's largest publicly traded oil company also said it would cut spending this year by one-quarter, Reuters reported.
Oil prices fell on Tuesday, dented by worries about the demand outlook and rising supply, while hopes for a deal between OPEC and Russia on output cuts faded.
Brent for April delivery held more than 4 percent lower near $32.70 a barrel, while West Texas Intermediate (WTI) futures were off more than $1, or 4 percent, just above $30 a barrel as of 8:44 a.m. ET.
Other major earnings from UBS also dented confidence, as profits at the Swiss bank's wealth management arm fell sharply, pushing shares down as much as 7 percent.
Back in the U.S., key earnings reports included UPS, Archer Daniels Midland, and Michael Kors, before market open.
Gilead Sciences, Yahoo, Chipotle Mexican Grill, Equity Residential, IAC/InterActive and Match Group will all report after the bell.
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In a night of surprises, Texas Senator Ted Cruz rode a wave of strong evangelical support to a projected victory over national front-runner Donald Trump in the GOP's Iowa caucus, according to NBC News.
On the other side of the race, Democratic candidate Hillary Clinton appeared to have won the Iowa caucus after her rival, Vermont Sen. Bernie Sanders, dubbed it "a virtual tie."
"The fact (Donald) Trump came in second would probably be a positive in this marketplace but it is offset by the strong showing Bernie Sanders had. The worst case scenario would be coming out of New Hampshire with the two leaders Donald Trump and Bernie Sanders," said Art Hogan, chief market strategist at Wunderlich Securities.
However, he said the market was more impacted by oil, as of early morning trade Tuesday.
No major data releases are due Tuesday apart from light vehicle sales data for January.
Asia markets closed mostly lower on Tuesday, weighed by declines in the energy sector as oil prices continued to tumble.