* Alphabet surpasses Apple as most valuable US company
* Michael Kors soars after profit bests estimates
* Yahoo, Chipotle to report after the close
* Futures down: Dow 134 pts, S&P 17 pts, Nasdaq 35 pts (Adds details, comment, updates prices)
By Tanya Agrawal
Feb 2 (Reuters) - Wall Street was set to open lower on Tuesday as oil prices fell further, hit by worries about weak demand and rising supply.
Oil prices were down about 4 percent as hopes for a deal between OPEC and Russia on output cuts faded with Goldman Sachs saying it was “highly unlikely”. Oil has fallen more than 70 percent since June 2014.
Shares of Exxon fell 2.75 percent in premarket trading after the oil major reported a 58 percent drop in quarterly profit.
Investors were also concerned about a China-led global economic slowdown and the pace of rate hikes by the U.S. Federal Reserve. The S&P 500 has fallen 5.1 percent this year.
Adding to concerns, consumer saving from cheap gasoline prices have failed to translate into higher spending as U.S. consumers increase their savings and choose to pay down debt rather than buy big-ticket items.
“The reaction of U.S. equities to oil, China and other external factors tells more about the internal status of the market,” said Scott Clemons, chief investment strategist at Brown Brothers Harriman in New York.
“Stocks are slightly overvalued even with the recent pullback and what we need is a rebound in corporate earnings.”
Clemons said corporate earnings will improve when there is a slight acceleration in wages which will lead to a rise in consumer spending.
Fourth-quarter S&P 500 earnings are expected to have fallen 4.1 percent from a year earlier, according to Thomson Reuters data. The estimate has improved since last week.
Big names such as Yahoo and Chipotle are scheduled to report results after the close of market.
Dow e-minis were down 134 points, or 0.82 percent, with 42,186 contracts changing hands at 8:50 a.m. ET (1350 GMT). S&P 500 e-minis were down 16.5 points, or 0.85 percent, with 297,110 contracts traded. Nasdaq 100 e-minis were down 34.5 points, or 0.8 percent, on volume of 46,491 contracts.
Traders expect the Fed to scale back the number of rate hikes this year. They are pricing in only a 17-percent chance that the Fed will raise rates in March, according to CME Group’s FedWatch.
Fed Vice Chairman Stanley Fischer’s remarks on Monday seemed to calm some investors regarding the pace of future hikes. Fischer said the U.S. economy could suffer, with inflation remaining too low, if recent volatility in financial markets persists and signals a slowdown in the global economy.
Investors are also keeping a close eye on the U.S. election cycle, with Senator Ted Cruz winning the Republican caucus in Iowa on Monday and Democrat Hillary Clinton narrowly edging out Senator Bernie Sanders.
Clemons said it is too early for the market to factor in the U.S. election but as specific policy proposals firm up, the market will take note.
Alphabet was up 5 percent at $810, a day after the internet giant’s quarterly profit handily beat estimates. Alphabet surpassed Apple as the most valuable U.S. company. Apple was down 1.2 percent at $95.26.
Michael Kors was up 18.8 percent at $48.05 after the handbag and accessories maker reported a smaller-than-expected decline in quarterly sales.
Mattel was up 6.5 percent at $28.49 after the toy maker reported a surprise rise in quarterly net sales, its first increase in over two years. (Reporting by Tanya Agrawal; Editing by Don Sebastian)