A man walks along Wall Street in New York September 18, 2008.
A man walks along Wall Street in New York September 18, 2008. Reuters / ERIC THAYER

Wall Street futures slid on Monday, as rising geopolitical tensions between Russia and the West posed a double whammy for investors already worried about aggressive policy tightening by the Federal Reserve to combat surging inflation.

The United States has said Russia could invade Ukraine at any time and might create a surprise pretext for an attack. The U.S., which is keeping its diplomatic channels open, also reaffirmed its pledge to defend "every inch" of NATO territory.

Declines were across the board, with lenders Bank of America Corp, Wells Fargo & Co, JPMorgan Chase & Co and Citigroup Inc down over 1% each in premarket trading as the U.S. Treasury yield curve narrowed on Monday to its flattest since April 2020. [US/]

Industrials Boeing Co and Caterpillar Inc slipped, while megacap growth firms including Meta Platforms Inc, Apple Inc, Microsoft Corp, Alphabet Inc and Tesla Inc shed between 0.8% and 1.8%.

The CBOE Market Volatility index, also known as Wall Street's fear gauge, shot up to its highest level in nearly three weeks.

"We're really dealing with the unknown and that's what worrying markets in the short term," said Jonathan Bell, chief investment officer, Stanhope Capital.

"Something like Ukraine may have an impact in the short term but longer term I think markets are beginning to worry about interest rates."

At 06:57 a.m. ET, Dow e-minis were down 231 points, or 0.67%, S&P 500 e-minis were down 28 points, or 0.63%, and Nasdaq 100 e-minis were down 119.5 points, or 0.84%.

The major indexes had a rocky start to 2022, with the tech-heavy Nasdaq down 11.8% so far this year as worsening price pressures ramped up traders' bets for a half-point rate hike at Fed's March meeting.

Currently, traders are pricing in 56% odds that the Fed will raise rates by 50 basis points in March, according to CME Group's Fedwatch tool.

Market participants now await producer prices data for January and minutes from the U.S. central bank's most recent monetary policy meeting later this week.

"We will scan the minutes for clues as to whether this number is logical or not," said Charalambos Pissouros, head of research at JFD Group.

"Anything confirming that the Fed is willing to proceed as aggressive as the current market pricing suggests could support the U.S. dollar, and perhaps result in further retreat in equities."

Attention will also be on an appearance by St. Louis Fed President James Bullard on CNBC on Monday, given he recently called for 100 basis points of tightening by June.

Meanwhile, the fourth-quarter earnings season is in full swing, with profits for the S&P 500 companies now expected to grow 31% year-over-year.

Goodyear Tire & Rubber Co rose 2.6% after J.P. Morgan upgraded the tire manufacturer's stock to "overweight" from "neutral".