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Wall Street set for lower open, focus on data and Fed minutes

Wall Street set for lower open, focus on data and Fed minutes © Reuters. FILE PHOTO: People walk around the New York Stock Exchange in New York, U.S., December 29, 2023. REUTERS/Eduardo Munoz/File Photo

By Sruthi Shankar and Shristi Achar A

(Reuters) -U.S. stock indexes were set for a lower open on Wednesday, as investors locked in profits after a strong 2023 and awaited economic data and the Federal Reserve’s December meeting minutes that could offer hints on its interest rate path.

Wall Street kicked off the new year on a downbeat note on Tuesday, halting a blistering rally in stock markets, as Apple (NASDAQ:) and high-growth companies came under pressure from higher yields.

Shares of rate-sensitive megacap stocks extended their drop on Wednesday, with Nvidia (NASDAQ:), Apple and Tesla (NASDAQ:) down between 0.5% and 1.2% before the bell, as the climbed for a fourth straight session to 3.969%. [US/]

“The decline yesterday, today and maybe for the next couple of weeks, is a result of people locking in profits and reconsidering what the narrative is – are rates really going down five or six times as it appeared to be the narrative at the end of last year?” said Ken Polcari, managing partner at Kace Capital Advisors

The benchmark came within striking distance of its all-time closing high last week as investors priced in aggressive rate cuts this year following signs of cooling inflation.

While the Fed is widely expected to keep rates on hold in January, traders have priced in a 67.2% chance of a 25 basis point rate cut in March, as per CMEGroup’s FedWatch tool.

The minutes of the Fed’s December meeting are scheduled for release at 2:00 p.m. ET and could offer details about the central bank’s pivot to interest rate cuts.

“The minutes are going to show that they’ve been talking about potentially starting to cut rates, but not at the rate at which the market is expecting,” added Polcari.

The U.S. central bank is “making real progress” towards taming inflation without inflicting major damage on the job market, and a soft landing seeming “increasingly conceivable,” said Richmond Fed President Thomas Barkin, a voting member in the FOMC’s rate-setting committee this year.

Investors are also awaiting Institute for Supply Management’s December manufacturing activity survey and November job openings data later in the day.

At 8:40 a.m. ET, were down 93 points, or 0.24%, were down 15.5 points, or 0.32%, and were down 76.25 points, or 0.46%.

Shares of Pfizer (NYSE:) edged up 1.3% and Moderna (NASDAQ:) gained 1.4%, adding to sharp gains in the previous session as investors picked up beaten-down stocks of 2023.

Verizon Communications (NYSE:) rose 2.1% after KeyBanc upgraded the stock to “overweight”.

Charles Schwab (NYSE:) dropped 1.6% after Goldman Sachs downgraded the stock to “neutral” from “buy”.

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