Wall St set to open lower as investors await Fed signal By Reuters

By Amruta Khandekar

(Reuters) -Wall Street’s main indexes were set to open lower on Monday, capping a month dominated by mixed earnings reports and expectations of the Federal Reserve toning down its hawkish stance on inflation.

Focus is on the U.S. central bank’s monetary policy meeting on Tuesday and Wednesday, where policymakers are expected to deliver a fourth straight 75-basis point interest rate hike to curb decades-high inflation amid debate over when to downshift to smaller rate hikes.

Monthly nonfarm payrolls data, due later this week, could also offer clues on the path of interest rates.

The and the Nasdaq notched their second straight week of gains on Friday, supported by better-than-expected results from companies outside the technology sector as well as hopes for a less hawkish Fed.

Both the indexes are also set to record gains in October after two straight months of declines. The Dow Jones, meanwhile, is up 14.4% so far this month and could see its biggest monthly rise in over four decades depending on the day’s moves.

“You have a convergence of the labor market and the Fed together, and so it should make it a very questionable market week in terms of the direction,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

“We’ll be hearing from Fed Chair Powell on Wednesday and his words probably mean more than his actions. If his tone, if his language begins to moderate somewhat, that will continue to be positive for stocks.”

Traders are nearly equally split in their expectations of the Fed delivering a smaller interest rate hike at its next policy meeting, with odds of a 50 basis point rate hike in December standing at 47.9%, according to CME Group’s (NASDAQ:) Fedwatch tool.

At 9:01 a.m. ET, were down 175 points, or 0.53%, were down 23 points, or 0.59%, and were down 86.75 points, or 0.75%.

With 10-year bond yields rising for the second straight session, shares of megacap tech giants such as Microsoft (NASDAQ:), Google owner Alphabet (NASDAQ:) and Meta Platforms that disappointed investors with their earnings reports last week, fell between 0.8% and 1% in premarket trading.

Apple Inc (NASDAQ:) was down 1.3%. Production of Apple’s iPhones could slump by as much as 30% at Foxconn’s Zhengzhou factory due to tightening COVID-19 curbs in China, a source told Reuters.

Shares of U.S.-listed Brazilian firms such as oil major Petrobras and iron ore miner Vale fell 7.1% and 1.9% respectively after leftist Luiz Inacio Lula da Silva won Sunday’s presidential election.