The major U.S. index futures are currently pointing to early weakness on Tuesday, with stocks likely to see further downside after turning lower over the course of the previous session.

Renewed uncertainty about the outlook for interest rates may weigh on the markets as traders digest recent U.S. economic data.

Last Friday’s closely watched inflation data combined with Monday’s stronger than expected manufacturing data have raised questions about whether the Federal Reserve will lower rates in June.

Treasury yields moved sharply higher in reaction to the data on Monday and are seeing further upside this morning, with the yield on the benchmark ten-year note reaching a four-month high.

While CME Group’s FedWatch Tool is currently still indicating 56.8 percent chance the Fed will cut rates by a quarter point in June, that is down from 63.8 percent a week ago.

After failing to sustain an early move to the upside, stocks moved mostly lower over the course of the trading day on Monday. The Dow and the S&P 500 gave back ground after ending last Thursday’s trading at record closing highs, while the tech-heavy Nasdaq managed to end the day in positive territory.

While the Nasdaq inched up 17.37 points or 0.1 percent to 16,396.83, the Dow slid 240.52 points or 0.6 percent to 39,566.85 and the S&P 500 dipped 10.58 points or 0.2 percent to 5,243.77.

The early strength on Wall Street came as traders finally had an opportunity to react to last Friday’s closely watched U.S. consumer price inflation data, which largely came in line with expectations.

The Commerce Department report said the annual rate of consumer price growth ticked up to 2.5 percent in February from 2.4 percent in January, in line with estimates.

Meanwhile, the annual rate of growth by core consumer prices, which exclude food and energy prices, slowed to 2.8 percent in February from an upwardly revised 2.9 percent in January.

Economists had expected the pace of core price growth to come in unchanged compared to the 2.8 percent originally reported for the previous month.

The readings on inflation, which are said to be preferred by the Federal Reserve, were included in the Commerce Department’s report on personal income and spending in February.

Buying interest remained somewhat subdued, however, as traders expressed uncertainty about whether inflation is slowing quickly enough to guarantee the interest rate cuts expected by the Fed.

The subsequent pullback by stocks came as a report from the Institute for Supply Management unexpectedly showing modest growth in U.S. manufacturing activity in the month of March contributed to a jump by Treasury yields.

The ISM said its manufacturing PMI jumped to 50.3 in March from 47.8 in February, with a reading above 50 indicating growth in the sector. Economists had expected the index to inch up to 48.4.

With the much bigger than expected increase, the index returned to expansion territory for the first time since September 2022.

The ISM said the prices index also jumped to 55.8 in March from 52.5 in February, as commodity driven costs remain unstable.

Airline stocks came under considerable selling pressure over the course of the session, resulting in a 1.9 percent slump by the NYSE Arca Airline Index. The index gave back ground after ending last Thursday’s trading at a three-month closing high.

Significant weakness was also visible among interest rate-sensitive commercial real estate stocks, as reflected by the 1.8 percent loss posted by the Dow Jones U.S. Real Estate Index.

Interest rate-sensitive housing and telecom stocks also saw notable weakness on the day, dragging both the Philadelphia Housing Sector Index and the NYSE Arca North American Telecom Index down by 1.4 percent.

Banking, pharmaceutical and brokerage stocks also moved lower, while gold, computer hardware and semiconductor stocks moved to the upside.

Among semiconductor stocks, Micron Technology (MU) surged by 5.5 percent after Bank of America raised its price target on the company’s stock to $144 per share from $120 per share.