Wall St set for subdued open ahead of business activity data

By Bansari Mayur Kamdar and Devik Jain

(Reuters) – Wall Street was set for a muted open on Tuesday after a steep selloff in the previous session on concerns about aggressive signals from the U.S. Federal Reserve on rate hikes, with manufacturing and services data on tap.

The S&P flash composite Purchasing Managers’ Index due at 9:45 a.m. ET, which would provide clues on the strength of the U.S. economy, will follow weak readings from Europe earlier in the day that compounded expectations of a recession in the region and pressured global markets. [MKTS/GLOB]

Wall Street has closed sharply lower in the past two sessions as investor focus turned to a Fed gathering later this week in Jackson Hole, where central bank Chair Jerome Powell is expected to reinforce a strong commitment to stamp out inflation running at four-decades high.

“The market has been wrong that we’re close to a pivot point by the Fed,” said Chris Grisanti, chief equity strategist at MAI Capital Management.

“I expect Powell to be more hawkish than current consensus expects. He will once again reiterate that their primary goal is to defeat inflation, he is not there to support the equity markets or the bond market. The market yesterday was a reflection of that fears.”

After a rough start to the year, markets rallied since mid-June on hopes inflation has peaked but the summer rally snapped last week on renewed fears around an aggressive monetary policy tightening path by the Fed.

Traders remain split between a 50-basis point and a 75-basis point hike by the central bank at its meeting next month, though economists polled by Reuters expect a 50-basis point hike. [FEDWATCH]

U.S. Treasury yields extended their gains on Tuesday, a day after scaling past 3% for the first time since July 21, weighing on megacap growth and technology stocks.

High-growth stocks and banks were mixed in choppy trading before the bell.

At 8:43 a.m. ET, Dow e-minis were down 14 points, or 0.04%, S&P 500 e-minis were down 1 point, or 0.02%, and Nasdaq 100 e-minis were up 2 points, or 0.02%.

Macy’s Inc rose 1.7% on beating quarterly profit estimates, while Palo Alto Networks Inc gained 9.8% after the cybersecurity firm posted upbeat quarterly results and announced a stock split plan.

U.S.-listed shares of JD.com Inc climbed 2.1% on beating quarterly revenue expectations as pandemic-related lockdowns in China boosted online shopping.

Zoom Video Communications Inc tumbled 11.7% after the company cut its annual profit and revenue forecasts.

(Reporting by Bansari Mayur Kamdar and Devik Jain in Bengaluru; Editing by Sriraj Kalluvila and Shounak Dasgupta)

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