Futures for the Dow Jones Industrial Average dropped 60 points to 13,555, while those for the S&P 500 index fell 7.10 points to 1,526.
Nasdaq 100 lost 10 points to 1,926.
Bucking the lower trend, TD Ameritrade gained 4.45% before the open after two hedge funds with a stake in the brokerage suggested it find a merger partner. Charles Schwab & Co. said it's not interested in a merger.
Stocks futures extended losses before the open following a Labor Department report showing unit labor costs - a key gauge of inflationary pressures - were revised higher to 1.8% annualized from 0.6% previously in the first quarter.
Economists surveyed by MarketWatch expected costs to be revised to 1.7%.
"This upward unit labor cost tilt is certainly a troublesome development at the Fed," said Mike Englund, chief economist at Action Economics.
The market was already under pressure before the data, with investors continuing to re-assess the valuations of share prices in light of rising bond yields, which offer a risk-free alternative to stocks.
Bonds showed little immediate reaction to the data, with the benchmark 10-year Treasury bond trading unchanged, while its yield stood at 4.99%.
On Tuesday, the Dow industrials fell 80 points, after data showing improving sentiment in the service sector and remarks from Federal Reserve Chairman Ben Bernanke who continued to highlight the Fed's concerns over inflation.
U.S. government bonds are also under pressure from rising yields globally. The European Central Bank, as expected, hiked its key rate to 4% from 3.75%.
The dollar still edged higher against the euro, as investors had widely anticipated the ECB's decision. The U.S. currency, meanwhile, was down against the yen.
Oil futures were slightly higher ahead of a weekly report on energy inventories.
Whole Foods Market fell 2% after the Federal Trade Commission decided to file a lawsuit to block its merger with Wild Oats . Morgan Stanley cut Whole Foods rating to equal-weight from overweight on the decision.
Separately, Goldman Sachs downgraded Borders to sell from neutral, saying the FTC decision makes a merger with Barnes & Nobles less likely.
Guess gained 4% after the Los Angeles retailer lifted its annual earnings outlook.
GlaxoSmithKline fell 0.3% as a hearing in Congress debates the Food and Drug Administration's role in approving its diabetes drug Avandia. Glaxo put out its own study on Tuesday defending the drug's cardiovascular safety, after a separate study suggested the drug increases heart attack risk.
By Nick Godt