US STOCKS-Wall St set to open lower as oil, bond yields tick up

Wall Street's main indexes were set to open lower on Wednesday, pressured by rising crude prices and government bond yields as investors awaited developments from negotiations to end the Middle ‌East conflict ahead of the high-stakes US-China summit. Brent Crude prices climbed over 1% after five straight sessions of declines, though they remained pinned near a two-week low.

Yields on the two-year and 10-year government bonds ticked higher, adding to market concerns that borrowing costs will remain elevated for longer. "The market is in a limbo right now ... because ‌bond yields and oil prices are up," said Sam Stovall, chief investment strategist at CFRA Research.

Traders are awaiting updates from US and Iranian officials after their ‌mediators commenced negotiations on the sidelines of the UN General Assembly on Tuesday. Chinese President Xi Jinping is expected to arrive in Washington later in the day on a state visit. The agenda includes extending the trade truce reached last year between the two superpowers, AI regulation and US arms sales to Taiwan.

He is also expected to meet several top executives, including those from General Motors, ⁠Meta, Apple , ​Amazon and Tesla. Shares of these companies were ⁠flat to marginally higher in premarket trading. At 08:40 a.m. ET, Dow E-minis were down 145 points, or 0.28%, and S&P 500 E-minis were down 9 points, or 0.11%. Nasdaq 100 E-minis ⁠were down 73.75 points, or 0.24%.

Optimism around AI continued to power Wall Street as the tech-heavy Nasdaq notched its first intraday record high since early June on Tuesday. The latest gains have ​been aided by strong reception of Meta's AI assistant Muse, which analysts say could benefit tech infrastructure stocks, while also spurring AI disruption chatter in ⁠pockets of the market. The S&P 500 Financials sector logged its biggest daily drop since March on Tuesday.

JPMorgan Chase, Charles Schwab and consumer-focused companies such as Uber and Airbnb were marginally higher, steadying after ⁠sharp ​declines in the previous session. On the earnings front, casual dining chain Cracker Barrel added 6.8% after beating fourth-quarter sales estimates.

Increasing AI spending and higher energy costs from the US-Iran war have led policymakers at the Federal Reserve to flag the need to keep interest rates restrictive for longer, following last week's decision to hike ⁠rates. S&P Global's September Purchasing Managers' Index data is expected later in the day. Economists polled by Reuters are anticipating it to show business activity stayed in ⁠expansion territory — above the 50 mark.

Fed Governor Michael ⁠Barr is expected to speak later in the day and his remarks will be scrutinized for clues on policy outlook. Traders are now pricing in a 50% chance that interest rates could be hiked by at least 25 basis ‌points next month, the CME ‌Group's FedWatch Tool showed.