US STOCKS-Wall St set for dull start to 2024 as yields rise, Apple dips

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Apple down on Barclays' downgrade

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Crypto stocks jump as bitcoin rises above $45,000

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Boeing slips after Goldman removes stock from 'conviction list'

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Futures down: Dow 0.60%, S&P 0.81%, Nasdaq 1.16%

(Updated at 8:26 a.m. ET)

By Sruthi Shankar and Shristi Achar A

Jan 2 (Reuters) - U.S. stock index futures fell on Tuesday, setting a somber tone for the first trading day of 2024, as Apple dipped after a broker downgraded its shares and investors pondered if last year's big market gains could be sustained.

Wall Street's three major indexes notched monthly, quarterly and annual gains on Friday as traders priced in higher chances of interest rate cuts from the Federal Reserve this year on the back of cooling inflation.

For 2023, the benchmark S&P 500, the tech-heavy Nasdaq and the blue-chip Dow posted double-digit gains. The S&P 500 ended last week within 1% of its record closing high reached on Jan. 3, 2022.

However, U.S. stock futures came under pressure on Tuesday as the yield on 10-year U.S. Treasury notes, the benchmark for global borrowing costs, ticked above 4.0000% to a two-week high, before easing to 3.9707%.

Megacap stocks including Nvidia, Tesla and Alphabet shed more than 1% each in premarket trading. Apple fell 2.4% after Barclays downgraded the iPhone maker's stock to "underweight".

"It's day one after a tremendous run. When you think about what happened from the October lows to now, I would expect the first three months of this year to be tough and this week to be somewhat exemplary of that, with people taking profits, realigning portfolios," said Phil Blancato, CEO of Ladenburg Thalmann Asset Management.

"It's going to be about interest rates in these first few days of the year."

The CBOE Volatility index, also known as Wall Street's fear gauge, touched a near two-week high at 14.11 points.

At 8:26 a.m. ET, Dow e-minis were down 227 points, or 0.6%, S&P 500 e-minis were down 39.25 points, or 0.81%, and Nasdaq 100 e-minis were down 196.75 points, or 1.16%.

Following a blockbuster 2023, boosted by optimism around artificial intelligence and stabilizing interest rates, more inflation data and looming presidential elections will put further market gains to the test.

S&P Global's final reading of U.S. manufacturing activity for December is due at 9:45 a.m. ET. Weekly jobless claims, monthly private and non-farm payrolls data as well as services sector data are on the roster for the week.

Market participants are also awaiting the Fed's December policy meeting minutes, scheduled for release on Wednesday, to ascertain the timing of the rate cuts.

While the Fed is widely seen holding interest rates at its January meeting, traders expect a 70% chance of a 25-basis point rate in March, according to the CME Group's FedWatch tool.

Companies linked to cryptocurrencies gained premarket as bitcoin stormed above $45,000 for the first time since April 2022, on optimism around the possible approval of exchange-traded spot bitcoin funds.

Coinbase Global and MicroStrategy jumped 2.8% and 7%.

Energy majors such as Exxon Mobil and Chevron edged higher, tracking a 2% jump in crude prices after a naval clash in the Red Sea raised the chances of Middle East supply disruptions.

Boeing shed 1.4% after Goldman Sachs removed the aerospace company from its "conviction list".

(Reporting by Sruthi Shankar and Shristi Achar A in Bengaluru; Editing by Devika Syamnath)