US pre-open: Futures rise as Dow rebounds after recent sell-off

US stock futures were rising in pre-market trade on Tuesday, with risk appetite expected to return following recent weakness, though rising oil prices may keep a lid on gains.

The Dow Jones Industrial Average, which dropped 2.3% last week as it continued to pull back after settling above the 40,000 mark for the first time on 17 May, was expected to open around 0.1% higher, while the S&P 500 and Nasdaq were rising 0.3% and 0.5%, respectively. US markets were closed on Monday for a national holiday.

Also rising was the price of oil, with WTI crude up 1.5% at $78.90 a barrel early on. While significantly lower than the $86-87 level seen in late-April, prices were rebounding on Tuesday on the back of rising tensions inn the Middle East.

"Israel’s bombing of Rafah, the killing of an Egyptian soldier and ongoing attacks on shipping routes by Houthi rebels mean that the situation remains incredibly precarious, keeping oil prices vulnerable to upside shocks," said analyst James Harte of TickMill Group.

Harte added that a weaker dollar was also boosting the demand for crude ahead of a key reading of US inflation due on Friday – the personal consumption expenditures index. "Traders [are] wary of an uptick in easing expectations should the data show any fresh weakness in inflationary pressure. Of course, if the data comes in above forecasts, this will see a stark drop in near-term easing expectations, sending USD higher and weighing on crude," he said.

Tuesday's economic data schedule was relatively light, with the S&P/Case-Shiller home price index due out at 0900 EDT and the national consumer confidence index at 1000 EDT the only major releases of the day.

However, speeches from a number of Federal Reserve policymakers will be closely watched, with Minneapolis Fed president Neel Kashkari, San Francisco Fed president Mary Daly and Fed governor Lisa Cook all scheduled to talk.

Kashkari was first up and said in an interview with CNBC that the Fed is looking for "many months" of positive inflation data before it considers cutting interest rates.

In corporate news, Nvidia shares were rising ahead of the opening bell, adding to recent gains after the chipmaker smashed forecasts with its quarterly results last week. Futures were up nearly 3% in pre-market trade, building on the 28% gain in the stock already this month.