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Futures off: Dow 0.18%, S&P 500 0.21%, Nasdaq 0.20%

Dec 30 (Reuters) - U.S. stock index futures slipped in

light trading volumes on Monday as elevated Treasury yields

threatened to pressure a historically strong year-end period for

equities.

At 05:36 a.m. ET, Dow E-minis were down 78 points,

or 0.18%, S&P 500 E-minis were down 12.75 points, or

0.21%, and Nasdaq 100 E-minis were down 43.75 points, or

0.20%.

Equities tend to do well in the last five trading days of

December and into the first two days of January, a phenomenon

dubbed the Santa Claus rally. The S&P 500 has gained 1.3% on

average during the period since 1969, according to the Stock

Trader's Almanac.

The benchmark index eked out marginal gains last week, with

analysts pointing to a strong run earlier in the year that sent

valuations soaring. The index has been trading in a bull market

for over two years and is poised to end its second consecutive

year with gains of more than 20%.

Much of this year's rally was fueled by optimism around

interest rate cuts, artificial intelligence integration boosting

corporate profitability and on expectations that President-elect

Donald Trump's policies could spur economic growth.

However, some analysts expect Trump's policies to be

inflationary, with yields on U.S. Treasury notes across the

curve pinned at multi-month highs.

Since early December, the yield on the benchmark 10-year

note has risen to touch its highest level since May

2024. On the day, it was slightly lower.

Investors tempered their expectations on the total number of

interest rate cuts by the Fed in 2025 after the institution

struck a cautious tone at its meeting earlier in the month.

They now expect the central bank to deliver its first rate

reduction in May next year, according to the CME Group's

FedWatch Tool.

Later in the week, investors will scrutinize the Institute

of Supply Management's manufacturing activity survey for

December and a weekly report on jobless claims, ahead of a key

employment report due in the following week.

Growth stocks weakened in premarket trading. Tesla

dropped 1.6%, Meta dipped 0.5%, while chip company

Broadcom ( AVGO ) lost 0.6% and Nvidia ( NVDA ) slipped 0.8%.

South Korea ordered an emergency safety inspection of its

entire airline operation system after the country's worst air

disaster over the weekend involving a Boeing ( BA ) plane. Boeing's ( BA )

shares were down 4.5%.

Trading is expected to be impacted by thin volumes in the

run up to the New Year holiday on Wednesday and is likely to

remain subdued until Jan. 6.