By Sruthi Shankar and Shristi Achar A
(Reuters) - The main U.S. stock indexes were on track for a mixed open on Tuesday as Treasury yields resumed their gains on bets of more interest rate hikes from the Federal Reserve.
Wall Street witnessed a volatile February that was dominated by concerns about the Fed sticking to its hawkish policies on the back of strong U.S. economic data and signs of elevated inflation.
U.S. stocks eked out gains on Monday, following a heavy selloff last week that had pushed the major benchmarks to their biggest weekly percentage declines of the year.
"Yesterday we had a bargain hunt rally and I suspect that could be the case today," said Peter Cardillo, chief market economist at Spartan Capital Securities.
"But of course, if the macro news should come in stronger than expected, we could see yields bumped up to the highs."
Data showed the U.S. trade deficit in goods increased moderately in January, with both imports and exports rising solidly.
Traders have started to price in the possibility of a bigger 50 basis-point rate hike in March, although the odds remain low at about 23%, according to Fed fund futures, which also suggest rates peaking at 5.41% by September, up from 4.57% now.
BofA Global Research warned the Fed could even hike interest rates to nearly 6%.
The yield on two-year Treasury notes, which tracks investors' expectations of the path of interest rates, rose to 4.8%, trading just below a near four-month high hit in the previous session.
"We're talking about stickier inflation in the economy and higher interest rates for longer. Markets still seem to think that we're going to get rate cuts sometime in the next 12 months and the evidence just does not support that," said Michael Hewson, chief market analyst at CMC Markets.
Chicago Fed President Austan Goolsbee, a voter in the rate-setting committee this year, will speak later in the day.
At 8:45 a.m. ET, Dow e-minis were up 43 points, or 0.13%, S&P 500 e-minis were up 3.5 points, or 0.09%, and Nasdaq 100 e-minis were down 2.25 points, or 0.02%.
The three main indexes are headed for monthly declines, with the blue-chip Dow in the red for the year.
Target Corp (NYSE:TGT) slipped 0.4% in premarket trading after the big-box retailer reported a surprise rise in holiday-quarter sales but cautioned on 2023 earnings due to an uncertain U.S. economy.
Zoom Video Communications Inc jumped 5% after it forecast annual profit above Wall Street estimates and said it will integrate more artificial intelligence into its products.
Chevron Corp (NYSE:CVX) gained 1.4% after the oil giant raised its annual share buyback outlook to between $10 billion and $20 billion.
Goldman Sachs Group Inc (NYSE:GS) inched up 0.2% after the investment bank said it would aim to grow fees from asset and wealth management and try to make profits from a newly created unit.