Megacaps such as Apple, Meta and Nvidia dipped between 0.2% and 1.1% in premarket trading as yields on benchmark U.S. 10-year notes and five-year notes rose to near four-week highs.

Conflicting expectations of the size and timing of interest rates have kept the market on edge since the start of this year.

Traders began the year expecting cuts by March, but sticky inflation and hawkish comments from central bankers have dampened expectations to a 25 basis points cut only by November or December, as per the CME FedWatch Tool.

"With no action expected at the (Fed's) upcoming meeting on June 12, the federal funds rate will have spent closer to one year at what we expect to be the peak rate for this Fed cycle," analysts at the Wells Fargo Investment Institute said in a note.

However, they reiterated expectations for at least two rate cuts this year.

Rising bond yields typically reflect expectations of higher interest rates, which mean costlier financing and smaller profit margins for companies.

The CBOE Volatility Index, a Wall Street fear gauge, jumped to 14.08 points, its highest since May 3.

Futures tracking the Nasdaq led declines, after the tech-heavy index closed above the 17,000 mark for the first time on Tuesday, driven by gains in Nvidia and fellow chip stocks.

However, the benchmark S&P 500 index ended flat and the Dow closed lower as unexpectedly strong consumer confidence data left market participants doubting the possibility of an imminent start to Fed's monetary policy easing cycle.

The main focus this week is on Friday's release of April's Personal Consumption Expenditure data - the Fed's preferred inflation gauge.

The central bank's Beige Book, due at 2:00 p.m. ET on Wednesday, is expected to throw light on the state of the U.S. economy. Markets will also closely monitor comments from this year's voting policymakers, including New York President John Williams and Raphael Bostic.

At 7:21 a.m. ET, Dow e-minis were down 258 points, or 0.66%, S&P 500 e-minis were down 35.75 points, or 0.67%, and Nasdaq 100 e-minis were down 135.5 points, or 0.72%.

Marathon Oil advanced 7.5% after a report said ConocoPhillips is in advanced talks to buy the company in an all-stock deal for a little over its $15 billion market value.

American Airlines cut its second-quarter profit forecast on weaker pricing power, sending its shares down 7.8%. Fellow carriers such as Southwest and Delta were also down over 2.1% each.

Shares of DICK'S Sporting Goods jumped 7.5% after the company lifted forecasts for annual sales and profit.

Broadly strong corporate earnings have helped offset rate worries. Of the 480 companies in the S&P 500 that reported earnings as of Friday, 77.9% surpassed analyst estimates versus a long-term average of 66.7%, according to LSEG data.

Robinhood Markets added 2.1% after the trading app maker launched its first-ever share buyback plan.