Around 7 a.m. ET, Dow Jones Industrial Average futures sank 205 points, indicating a loss of about 300 points at the open. S&P 500 and Nasdaq 100 futures also pointed to sharp drops at the open.
Tech shares were also headed for a steep decline after posting their worst day in seven years in the previous session. Facebook and Apple were both down more than 1 percent in the premarket, while Amazon and Netflix dropped at least 2 percent each. Twitter and Alphabet also traded more than 1 percent lower.
Spencer Platt | Getty Images
Traders work on the floor of the New York Stock Exchange (NYSE) on October 10, 2018 in New York City.
Rising U.S. Treasury yields have been keeping investors on their toes in previous sessions. The benchmark 10-year note yield recently hit its highest level in seven years while the two-year yield reached its highest mark since 2008 on Wednesday.
The rise in yields has stoked fears that rising borrowing costs could slow down the economy. It also adds concerns over what the future of U.S. monetary policy. The Federal Reserve has hiked rates three times this year and is largely expected to raise rates once more before year-end.
President Donald Trump criticized the Fed's strategy on more than one occasion on Wednesday, saying that the central bank was "making a mistake" by raising rates. In a telephone interview with Fox News later that day, he said he wasn't happy with the Fed, and that it was "going loco" and there was no reason for them to continue to raise rates at the pace they were doing.
International Monetary Fund managing director Christine Lagarde refuted Trump's claims, saying that she "would not associate" Fed Chair Jerome Powell "with craziness."
The rise in yields and the steep drop in equities comes as Wall Street braces for the latest round of corporate earnings. J.P. Morgan Chase and Citigroup are among the companies set to kick off the season. Wall Street has high hopes for corporate earnings, with analysts polled by FactSet expecting a 19 percent gain on a year-over-year basis.