Wall St set to open lower as growth worries linger; Fed in focus

Wall Street was set to open slightly lower on Monday, after skidding at the end of last week, keeping investors on edge as they waited for the Federal Reserve's monetary policy guidance and its implications of slowing global growth. The Fed is expected to raise interest rates at the end of its two-day meeting on Wednesday, but investors are hoping for signs the central bank may ease up on rate hikes next year and spark a Santa Claus rally.

President Donald Trump again criticized the Fed for its current series of rate increases, saying "It is incredible that with a very strong dollar and virtually no inflation, the outside world blowing up around us, Paris is burning and China way down, the Fed is even considering yet another interest rate hike."

U.S. stocks are having their worst December performance in 16 years, weighed down by concerns ranging from trade talks to interest rates and a flattening treasury yield curve to uncertainty over the shape of Brexit. The S&P 500 is down 5.8 per cent so far this month and the Dow Jones Industrial Average is now more than 10 per cent lower than its recent record closing high, joining the S&P and Nasdaq in what is known as correction territory.

"We took a big hit on Friday, and what we're seeing now is an uncertain market," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

"The options expiration on Friday will play a big part in keeping the volatility elevated. Traders might keep the pressure on certain stocks until expiration because of the downward trend." Friday marks "quadruple witching day", the quarterly simultaneous expiration of U.S. options and futures contracts, which tends to boost trading volume as investors replace expiring positions.

The trade truce between the United States and China and subsequent concessions by Beijing — such as buying more U.S. soybeans and oil as well as lowering tariffs on American-made cars — have also failed to spark the market. Trade experts and people familiar with Sino-U.S. negotiations say Beijing needs to do far more to meet U.S. demands for long-term change in how China does business.

Amid a slowing economy, President Xi Jinping will give a speech on Tuesday to mark the 40th anniversary of China's reforms and Beijing is expected to discuss key growth targets and policy goals for 2019 later in the week. At 8:44 a.m. ET, Dow e-minis were down 151 points, or 0.63 per cent. S&P 500 e-minis was down 11.5 points, or 0.44 per cent and Nasdaq 100 e-minis were down 28.75 points, or 0.44 per cent.

Johnson & Johnson's shares were off 2 per cent in premarket trading, extending Friday's fall when Reuters reported the company knew for decades that its Baby Powder contained asbestos. PG&E Corp dropped 4.5 per cent after California regulators opened a case against the utility for falsifying pipeline safety records. Goldman Sachs fell 2.24 per cent after Malaysia filed criminal charges against the U.S. bank and two of its former employees in connection with the 1MDB investigation.