By Shashwat Chauhan and Ankika Biswas
(Reuters) -Wall Street's main indexes were set for a subdued open on Tuesday as caution prevailed amid escalating tensions in the Middle East, while U.S. Treasury yields retreated following dovish comments from Federal Reserve policymakers overnight.
Top ranking Fed officials indicated rising yields on long-term U.S. Treasury bonds could steer the central bank from further increases in its short-term policy rate.
The 10-year Treasury yield came off its 16-year peak on Tuesday, as trading resumed in the U.S. bond market after Columbus Day, also known as Indigenous Peoples' Day.
Traders put the chance of interest rates remaining unchanged in November and December at around 86% and 72%, respectively, according to CME's FedWatch tool.
Focus will be on remarks from a slew of Fed officials including Atlanta's Raphael Bostic, Minneapolis' Neel Kashkari, San Francisco's Mary Daly and Board Governor Christopher Waller during the day.
Israel said it had reclaimed control of the Gaza border, pounding the enclave with fierce air strikes, as the country called up hundreds of thousands of reservists.
Israeli media said deaths from Saturday's Hamas attacks had reached 900, while Israel's retaliatory strikes had killed at least 770 people, according to Gaza's health ministry.
"If the conflict is confined, I don't think it's going to have much of an impact ... investors will be looking at the inflation data this week and then the beginning of banking earnings on Friday," said Peter Cardillo, chief market economist at Spartan Capital Securities.
All three major U.S. stock indexes closed higher on Monday, with energy leading gains as supply worries ignited by Middle East tensions sparked a rally in crude oil prices.
Later in the week, investors will look out for inflation readings including September producer price and consumer price indexes as well as the Fed's September meeting minutes.
Toward the end of the week, big U.S. banks JPMorgan Chase, Wells Fargo and Citigroup will report quarterly results.
At 8:40 a.m. ET, Dow e-minis were up 53 points, or 0.16%, S&P 500 e-minis were up 2.5 points, or 0.06%, and Nasdaq 100 e-minis were up 4.5 points, or 0.03%.
Among stocks, PepsiCo rose 0.9% after the company raised its annual profit forecast for a third time this year. Rival Coca-Cola was also up 0.8%.
Truist Financial gained 4.4% after a report said the bank is in talks to sell its insurance brokerage unit to private equity firm Stone Point for about $10 billion.
Rivian Automotive advanced 2.9% on a report that UBS upgraded the EV maker's stock to "buy" from "neutral".
Corning lost 2.7% after J.P.Morgan downgraded the specialty glass maker's shares to "neutral" from "overweight".
Chip firms Skyworks Solutions and Qorvo dipped 3.8% and 3.7%, respectively, after Citigroup downgraded the stocks.
Arm Holdings climbed 1.7% on a wave of "buy" ratings after the "quiet period" for the nearly 30 banks that underwrote its initial public offering ended on Monday.
(Reporting by Shashwat Chauhan and Ankika Biswas in Bengaluru; Editing by Arun Koyyur and Shounak Dasgupta)