Wall Street on rate watch again

NEW YORK (CNNMoney.com) -- Another jump in bond yields and a fall in overseas markets could extend Wall Street's sell-off that has already taken more than 400 points off the Dow Jones industrial average in the last three days.

Stock futures were down in early trading Friday, pointing to a lower open, as the yield on the 10-year Treasury note rose to 5.15 percent from 5.13 late Thursday, although that was off from earlier highs. It was a rise in Treasury yields above 5 percent Thursday that helped spur the sell-off in stocks.

Stock futures had been even lower earlier in the morning as the 10-year yield reached 5.25 percent. Wachovia economist Jay Bryson said that even with the somewhat improved futures, it's likely to be another tough day for stocks.

"Bonds were really moving earlier and they were oversold," Bryson said. "At best, I think stocks will trade gingerly today."

Stocks closed lower across Asia on concerns that higher interest rates will hurt demands for the region's exports to the United States. Stocks were also lower in early trading in Europe.

The dollar was higher against the euro and the yen in early trading

At 8:30 a.m. ET the Commerce Department will report on the U.S. trade gap in April. Economists surveyed by Briefing.com forecast that the gap narrowed slightly in the month to $63.5 billion from $63.9 billion in March. But the gap is likely to rise in future reports when higher oil prices start to get factored in.

Oil prices were lower in early trading, as a storm that had threatened oil platforms in the Persian Gulf began to lose strength. U.S. light crude lost 63 cents $66.30 a barrel in electronic trading.

In corporate news, a U.S. agency barred the import of new models of advanced cell phones containing chips from Qualcomm (Charts, Fortune 500), in a decision over its patent dispute with Broadcom (Charts).

The decision could pose problems for cell phone providers that were counting on the new handsets. Verizon Wireless, a joint venture between Verizon Communications and Vodafone (Charts), called on the Bush administration to overturn the decision that is due to become final in 60 days, according to The Wall Street Journal. Still, shares of Qualcomm were up 1.7 in extended trading, while Broadcom shares gained 1.1 percent.

National Semiconductor (Charts) reported stronger-than-forecast earnings and orders after the bell Thursday, sending its shares up 10 percent in after-hours trading.

Entertainment and electronics conglomerate Sony (Charts), dogged by disappointing sales of its PlayStation3 game console, announced that its video game unit plans to slash its workforce in North America, although it did not give a size of the expected cut. Shares of Sony fell 3 percent in Tokyo trading.