US STOCKS-Wall St set for lower open as Fed hawkishness lifts yields, growth stocks fall

Rate-sensitive stocks including Tesla, Meta Platforms, Amazon.com, Alphabet, and Nvidia fell between 1.9% and 2.5% in premarket trading as the two-year and 10-year Treasury yields scaled multi-year highs. The U.S. central bank delivered a widely anticipated pause on Wednesday and revised economic projections higher with warnings that the battle against inflation was far from over, prompting a weak session for Wall Street.

Wall Street's main indexes were poised for a weak open on Thursday as a jump in Treasury yields knocked down growth stocks after the Federal Reserve signaled that another rate hike was in the offing this year. Rate-sensitive stocks including Tesla, Meta Platforms, Amazon.com, Alphabet, and Nvidia fell between 1.9% and 2.5% in premarket trading as the two-year and 10-year Treasury yields scaled multi-year highs.

The U.S. central bank delivered a widely anticipated pause on Wednesday and revised economic projections higher with warnings that the battle against inflation was far from over, prompting a weak session for Wall Street. The benchmark interest rate could be hiked one more time in 2023 to a peak range of 5.50%-5.75%, while monetary policy could stay tighter than was expected through 2024, the Fed's updated quarterly projections showed.

"With interest rates like that and with other measures of the economy showing weaker-than-expected readings, the increasing concern is that we are headed for a recession," said Sam Stovall, chief investment strategist at CFRA Research in New York "Our economists were expecting cuts in each of the four quarters of next year, but now they think the first cut will be delayed until sometime in the second quarter."

Adding to rate jitters, U.S. jobless claims unexpectedly fell last week, though they could rebound in the weeks ahead as a partial strike by the United Auto Workers union forces automobile manufacturers to temporarily lay off workers because of shortages of material. Also adding to economic concerns, the Philadelphia Fed's business conditions index reading dropped to a worse-than-expected 13.5 in September.

The CBOE volatility index, known as Wall Street's "fear gauge", hit its highest level in nearly one month, reflecting rising investor anxiety. Traders' bets on the benchmark rate remaining unchanged in November and December stood at 72% and 53%, respectively, according to CME's FedWatch tool.

Some investors doubt the central bank will continue with monetary tightening, even though bets against the Fed's hawkishness have mostly backfired since policymakers embarked on a rate-hike campaign in March 2022. Meanwhile, weak performance of recent listings after their debut highs has dampened hopes of a likely revival in the initial public offering market amid high interest rates and broader market declines.

Marketing automation firm Klaviyo's shares fell 1.7% in premarket trading, after closing well below their intra-day debut high on Wednesday at $32.76. Instacart fell 0.1%, briefly slipping below its IPO price of $30 per share, while Arm Holdings shed 3.3% to $51.22, nearing its IPO price of $51 per share.

At 8:43 a.m. ET, Dow e-minis were down 202 points, or 0.58%, S&P 500 e-minis were down 38.25 points, or 0.86%, and Nasdaq 100 e-minis were down 190.5 points, or 1.26%. FedEx added 4.7% after surprising investors with a big quarterly profit beat.

Broadcom slid 6.4% on report Alphabet-owned Google's executives discussed dropping the company as a supplier of artificial intelligence chips as early as 2027. Marvell Technology gained 3.3% as the report said Google has been working to replace Broadcom with Marvell as the supplier for networking chips used in its data centers.

Warner Bros Discovery and Paramount Global rose 1% each on a report that writers and producers were nearing an agreement to end the Writers Guild of America (WGA) strike. Networking equipment maker Cisco Systems declined 4.3% on a deal to buy cybersecurity company Splunk whose shares jumped 19.6%.

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