US stock futures slipped on Tuesday on caution ahead of key US housing data that may shed more light on the state of the troubled housing market.
Shares of Internet media company Yahoo Inc traded up more than 5 per cent in Europe, however, so a bounce in technology could cushion the market.
Expedia Inc could also lend support with news that the online travel company planned to buy back up to $3.5 billion of its stock. Its stock shot up 13.7 per cent in electronic trade to $29.
Data on US housing starts is due before the bell, a day after a survey showed sentiment among US home builders fell in June to the lowest since February 1991.
Investors will also keep tabs on the direction of benchmark bond yields given lingering concern that higher interest rates may slow takeover bids and cut into corporate profits.
Also in focus is aluminum producer Alcoa, whose stock was down 2 per cent in Europe after sources familiar with the situation said BHP Billiton, the world's largest mining company, is considering a bid to rival Alcoa's $28.7 billion hostile offer for Canada's Alcan.
Alcan shares were up nearly a 1 per cent in Europe.
"The housing market is the key number of the morning. But I'm really looking for a slowdown in some of the volatility we've seen in the last week as we are now at the start of the summer season. I'd be surprised to see much activity without an outlier number in the economic report," said Rick Meckler, president of investment firm LibertyView Capital Management in Jersey City.
May housing starts data are due at 8.30 am (1230 GMT). A Reuters poll of economists estimated them at an annualized 1.48 million rate, down from a 1.53 million pace in April.
"Europe's also a little lower and there was some disappointment over lack of merger news on Monday. If bond yields continue to go higher, you may see some pressure on economically sensitive stocks, and technology may get a little boost from the Yahoo news," Meckler added.
S&P 500 futures were down 1.70 point, but above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures were down 5 points while Nasdaq 100 futures were down 1.50.
Microchip Technology Inc is also among stocks to watch after the semiconductor maker cut its first-quarter earnings forecast late on Monday. Its shares were down 7 per cent in Europe.
Yahoo said after the bell on Monday Chief Executive Terry Semel would step down and co-founder Jerry Yang will replace him. On Tuesday, brokerage Jefferies & Co cut its price target on Yahoo to $35 from $36 and kept a "buy" recommendation.
Los Angeles billionaire Ron Burkle may bid for Dow Jones & Co Inc as early as this week, Fortune magazine reported on its website. News Corp has a standing offer to buy Dow Jones.
Electronics chain Best Buy and Carnival Corp are among major S&P 500 companies reporting earnings on Tuesday.
US stocks slipped on Monday as oil climbed toward a 10-month high near $70 a barrel, taking a toll on energy-dependent sectors, while more worrisome data from the housing sector weighed on home builders.
(Additional reporting by Kristina Cooke)