A Wall Street sign is pictured outside the New York Stock Exchange amid the coronavirus disease (COVID-19) pandemic in the Manhattan borough of New York City, New York, U.S., April 16, 2021.
A Wall Street sign is pictured outside the New York Stock Exchange amid the coronavirus disease (COVID-19) pandemic in the Manhattan borough of New York City, New York, U.S., April 16, 2021. Reuters / Carlo Allegri

U.S. shares were set to open sharply lower on Monday, dragged down by high-growth stocks as Treasury yields surged, ahead of Tuesday's inflation data that could back a more hawkish stance from the Federal Reserve.

Electric-car maker Tesla Inc fell 4.7% in premarket trading after data showed China auto sales plunged in March, hurt by the country's curbs to rein in COVID-19 outbreaks.

Twitter Inc declined 3.5% after the social media company said Tesla boss Elon Musk rejected its offer to join the company's board.

Megacap growth stocks such as Meta Platforms Inc and Microsoft Corp, slipped over 1.5% each as the benchmark 10-year Treasury yield hit 2.77%. [US/]

Market-leading growth and technology stocks, whose valuations have grown rapidly in the wake of low interest rates, have come under pressure since late March on signals from the Fed that it will aggressively hike rates to control soaring inflation.

Data on Tuesday is expected to show U.S. consumer prices leapt to a fresh four-decade high of 8.5% in March, on a year-on-year basis, after hitting 7.9% in February as the Ukraine conflict drives up energy costs.

"The problem for stocks to gain momentum right now is that it really is unclear where the peak in inflation is," said Eric Merlis, managing director of global markets at Citizens.

"If we thought the Fed had a handle on inflation and the war wasn't going to spill over anymore into Europe, you would see growth stocks rally pretty convincingly. But we're not there."

The S&P 500 value index, which includes banking and energy stocks, has outperformed its growth counterpart so far this year, with the former nearly flat, while the growth index is down 11.1%.

At 08:28 a.m. ET, Dow e-minis were down 149 points, or 0.43%, S&P 500 e-minis were down 34.75 points, or 0.78%, and Nasdaq 100 e-minis were down 185.25 points, or 1.29%.

Investors will also be focusing on the big U.S. banks, which kick off the first-quarter earnings season on Wednesday. They are expected to show a sharp decline in quarterly earnings from a year earlier.

Overall, an aggressive Fed, soaring inflation and geopolitical uncertainty due to the war in Ukraine are muddying the outlook for the upcoming earnings season, leaving some analysts wary.

Media and streaming firm Warner Bros Discovery Inc, formed from the $43 billion merger of Discovery Inc and assets of AT&T Inc, rose 0.7% on the first day of trading day.

Many U.S.-listed Chinese shares mirrored a slump in domestic stocks amid concerns over pandemic curbs and inflation in China. Alibaba Group Holdings Inc, JD.com Inc and Pinduoduo Inc fell over 1.5% each.