US STOCKS-Future index dropped with bond yields at multi-year high

U.S. stock index futures dropped on Monday, still reeling from the aftershocks of a spike in Treasury yields last week following healthy economic data.

Yields on the 10-year note are perched at seven-year highs after a solid jobs report raised the spectre of faster interest rate hikes. The U.S. Treasury market is closed on Monday for the Columbus Day holiday.

While U.S. stocks have eased off record high levels following last week's drop, there are still concerns about valuations in the pricier names, especially with the corporate earnings season on tap.

The so-called FAANG group – Facebook, Amazon, Apple, Netflix and Alphabet – had led the market lower on Friday and their shares were down between 0.18 per cent and 1.15 per cent in premarket trading on Monday.

The news on Sino-U.S. diplomatic relations was not great either, with U.S. Secretary of State Mike Pompeo and Chinese Foreign Minister and State Councillor Wang Yi airing their grievances in the open on Monday during a brief visit to Beijing by Washington's top diplomat.

At 7:45 a.m. ET, Dow e-minis were down 87 points, or 0.33 per cent. S&P 500 e-minis was down 5.75 points, or 0.20 per cent and Nasdaq 100 e-minis were down 17.5 points, or 0.24 per cent.

Energy stocks could come under pressure as crude oil prices dropped below $83 a barrel on expectations that some Iranian oil exports will keep flowing after the U.S. reimposes sanctions, easing a strain on supplies.

Wynn Resorts fell 2.2 per cent and Las Vegas Sands was down 1.6 per cent after Morgan Stanley cut its gross gaming revenue growth estimates for Macau.

General Electric was set to extend a five-day rally, climbing 2.2 per cent after Barclays echoed investor optimism over Larry Culp, saying the conglomerate's new chief executive officer will be able to drive more robust restructuring.

(With inputs from agencies.)