U.S. stock index futures declined early Wednesday, extending the previous session’s losses amid ongoing concerns over the U.S. economy, trade tensions, and interest rate outlook.

As of 05:30 ET (09:30 GMT), Dow Jones futures dropped 265 points (0.2%), S&P 500 futures fell 35 points (0.6%), and Nasdaq 100 futures slipped 135 points (0.6%).

Wall Street’s main indexes pulled back on Tuesday, pressured by a spike in 10-year U.S. Treasury yields, which briefly hit an intraday high before settling around 4.48%. The S&P 500 broke a six-session winning streak, dragged lower by weakness in tech stocks after recent gains.

Cautious Sentiment Prevails

Investor sentiment remains fragile following Moody’s recent downgrade of the U.S. credit outlook and as lawmakers prepare to vote on a sweeping tax cut bill supported by President Donald Trump.

On the trade front, markets are watching for progress in U.S. negotiations with Japan and other major economies. However, China has renewed trade tensions, warning that new U.S. chip export restrictions could threaten the Geneva truce reached last week.

Federal Reserve officials added to the uncertainty with fresh comments expressing concerns over economic and trade instability, further reducing expectations for near-term rate cuts. They also warned that high tariffs could add upward pressure on inflation.

Trump’s Tax Bill Faces Resistance

Trump’s proposed tax and spending plan faces key opposition from within the Republican Party. The House is expected to vote on the measure Wednesday, with internal divisions posing a major hurdle.

If passed, analysts estimate the bill could add between $3 trillion and $5 trillion to the national debt, which currently stands at $36.2 trillion. Moody’s cited rising debt levels as a factor in its recent downgrade of the U.S. credit rating.

Retail Earnings in Focus

Several major retailers are scheduled to report earnings Wednesday as the Q1 earnings season nears its end. Reports are due from Lowe’s (LOW), Target (TGT), Canada Goose (GOOS), and TJX (TJX) before the opening bell. Cloud services firm Snowflake (SNOW) will report after the close.

Retail earnings come amid growing concerns about tariffs, which have led to downbeat forecasts from consumer-focused companies. Walmart (WMT) recently warned of price hikes, while Home Depot (HD) said Tuesday it plans to hold prices steady but acknowledged some items may become unavailable due to rising duties.

Oil Prices Jump on Geopolitical Risk

Crude prices surged following reports that Israel is preparing for a potential strike on Iranian nuclear sites, raising fears of disrupted supply from a key oil-producing region.

At 05:30 ET, Brent crude rose 1.6% to $66.44 per barrel, while U.S. West Texas Intermediate gained 1.7% to $63.11.

CNN reported Tuesday that Israel’s government is weighing military action amid heightened tensions, though no final decision has been made. The likelihood of a strike has “significantly increased,” according to U.S. officials familiar with intelligence assessments.

Separately, data from the American Petroleum Institute showed a surprise 2.5 million-barrel increase in U.S. crude inventories for the week ending May 16, defying expectations for a 1.9 million-barrel decline.