US STOCKS-Wall St to open lower as investors take cover before Fed decision

U.S. stocks were set to open lower on Wednesday as chip stocks led losses after downbeat results and markets exercised caution ahead of more economic data and the Federal Reserve's interest rate decision later in the day. Advanced Micro Devices shed 5.9% in premarket trading after its forecast for AI chip sales failed to impress investors, while Super Micro Computer lost 10.6% as the artificial intelligence server maker reported third-quarter revenue below estimates.

U.S. stocks were set to open lower on Wednesday as chip stocks led losses after downbeat results and markets exercised caution ahead of more economic data and the Federal Reserve's interest rate decision later in the day.

Advanced Micro Devices shed 5.9% in premarket trading after its forecast for AI chip sales failed to impress investors, while Super Micro Computer lost 10.6% as the artificial intelligence server maker reported third-quarter revenue below estimates. The weak results pressured other chip stocks as well, with Nvidia and Micron Technology down more than 1% each.

Amazon.com outperformed other growth stocks to rise 1.5% on better-than-expected quarterly results as interest in artificial intelligence helped drive cloud-computing growth. Weighing on sentiment, the ADP National Employment report showed U.S. private employment rose by 192,000 jobs last month, signaling a still-tight labor market. Economists polled by Reuters had expected an increase of 175,000 jobs in April.

Investors will now await more economic data during the day to further gauge the state of inflation in the U.S. economy, before tuning in to the Fed's interest rate decision at the end of its two-day meeting. "The Fed from a more credibility perspective has to acknowledge that the last few months have not been helpful in terms of data," said Russell Hackmann, president of Hackmann Wealth Partners.

"While they're probably not going to explicitly talk about the possibility of rate hikes, they have to really signal that the possibility of rate cuts is on hold until we start getting some more friendly inflation data." On the docket for the day are the April S&P Global final manufacturing PMI data shortly after the opening bell, the ISM manufacturing PMI data and the JOLTS job openings figures, both at 10 a.m. ET.

Money markets expect the U.S. central bank to stand pat on rates later in the day, pricing in just about 29 basis points (bps) of rate cuts this year, down from around 150 bps seen at the start of 2024, according to LSEG data. After a rough April, May will further test the performance of equity markets as the first-quarter earnings season continues and the interest rate outlook becomes clearer.

Over the last 50 years, the S&P 500 has gained an average of 4.8% between November and April, and just 1.2% between May and October, according to Reuters calculations, giving rise to the popular market adage "Sell in May and Go Away". At 08:26 a.m. ET, Dow E-minis were down 78 points, or 0.21%, S&P 500 E-minis were down 18.5 points, or 0.37% and Nasdaq 100 E-minis were down 94.5 points, or 0.54%.

Among other movers, Starbucks dropped 13.2% as the coffee giant cut its annual sales forecast and reported a fall in same-store sales for the first time in nearly three years. CVS Health shed 12.3% after the healthcare giant slashed its annual profit forecast and missed Wall Street estimates for first-quarter earnings.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)