(Reuters) - U.S. stock index futures slipped on Monday, as investors turned wary ahead of a slew of economic data this week that is likely to test the narrative about a cut in interest rates by the Federal Reserve early next year.

Wall Street kicked off December on an upbeat note, extending gains from the previous month that were driven by robust earnings and expectations that the Fed was done with its rate hiking campaign.

The benchmark registered its highest close of the year on Friday as remarks from Fed Chair Jerome Powell bolstered the peak rates view.

Traders have priced in the likelihood that the central bank will keep rates unchanged next week, with about 61% betting on rate cuts starting as soon as March 2024, according to the CME Group's (NASDAQ:) FedWatch tool.

However, some analysts have cautioned that markets have been too quick to price in lower interest rates.

"We are not in the camp of early or aggressive cuts. Inflation has been coming down but the path towards 2% is still long," Mohit Kumar, chief European economist at Jefferies, said in a note.

A number of economic reports through the week will provide a gauge on the interest rate path as well on the potential for a "soft landing" - where the Fed manages to bring inflation under control while averting a recession.

Investors are awaiting readings on U.S. services sector activity and a survey on job openings, while November's non-farm payrolls report is set to grab the spotlight on Friday.

Pressuring equities, Treasury yields edged higher on Monday after a sharp fall in the previous week.

Also hurting sentiment on Monday were renewed fears about a widening of the war between Israel and Hamas after an attack on three commercial vessels in the southern Red Sea.

Shares of (NYSE:) Group dropped 8.6% in premarket trading after the carrier said on Sunday it would acquire peer (NASDAQ:) for $1.9 billion, including debt. Hawaiian's shares nearly tripled in value.

At 5:21 a.m. ET, were down 57 points, or 0.16%, were down 10.25 points, or 0.22%, and were down 49 points, or 0.31%.

Shares of cryptocurrency firms such as Coinbase (NASDAQ:) Global, Riot Platforms (NASDAQ:) and Marathon Digital (NASDAQ:) rose between 8% and 14% as bitcoin crossed $40,000 for the first time this year.