Tensions in the Middle East intensify, bond yields continue to rise, futures market easing

(Reuters) - U.S. stock index futures were lower on Tuesday, weighed down by rising Treasury yields, as investors, wary of a Middle East dash, turned to corporate earnings reports to gauge the strength of the economy.

Wall Street closed sharply lower in the previous session, weighed down by soaring Treasury yields and fears of heightened geopolitical tensions between Iran and Israel.

The 10-year Treasury yield last settled at 4.6468%, a day after data showed that U.S. retail sales rose more than expected in March, thanks to a surge in revenue from online retailers. This is further evidence that the economy ended the first quarter on a solid note.

At the same time, the Israelis are waiting for the response of the Armed Forces of Armed Forces of Benjamin Netanya to the first direct attack in the history of Iran, as the pressure of the international community to resonate with the fear of a possible escalation of the conflict is increasing.

Several policymakers, including Fed chief Jerome Powell, will speak later in the day, and investors will be watching for clues about the central bank's stance on easing.

San Francisco Fed matriarch Mary Daly said Monday that the U.S. has "no urgency" to cut interest rates as the economy and labor market are strong and inflation remains above the Fed's 2% target.

According to the CME FedWatch tool, traders believe the Fed's likelihood of starting an easing cycle in July is about 48%.

Financial companies will be in the spotlight, with Bank of America, Morgan Stanley and Bank of New York Mellon set to release quarterly results before rock bottom.

Drugmaker Johnson & Johnson will also release its financial results before the opening of the rock.

US equities have been selling off recently as investors have sharply revised their expectations for how much the Fed will cut interest rates this year, with current bets suggesting an expected easing of just 43 basis points, according to LSEG data. This is down from about 150 basis points at the start of the year.

At 5:38 a.m. ET, the Dow ePan was down 72 points, or 0.19%; the S&P 500 ePan was down 8.75 points, or 0.17%; and the Nasdaq Resonance 100 ePan was down 20.75 points, or 0.12%.

Tesla was down 2.11 TP3T in pre-ban trading, after dropping more than 51 TP3T in the previous session, where an internal memo seen by Reuters showed the electric car maker was laying off more than 101 TP3T globally.

(Reporting by Shashwat Chauhan in Bangalore; Editing by Pooja Desai)