US market to open lower due to Fed no to interest rate hikes

Wall Street's main indexes were set to open lower on Thursday after the Federal Reserve abandoned any interest rate hikes this year and flagged an expected slowdown in the economy.

Having downgraded their U.S. growth, unemployment and inflation forecasts, policymakers said the Fed's benchmark overnight interest rate was likely to remain at the current level of between 2.25 per cent and 2.50 per cent at least through this year, a wholesale shift of their outlook. "The fear factor here is how weak exactly is the economy, how afraid is the Fed at this point, because to make a 180-degree turn as they did is significant," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

"They always kept the door open for another rate hike and now that window seems to be shut tight and that is spooking investors." Shares of U.S. lenders, which are sensitive to interest rates, fell in premarket trading. Citigroup Inc, Bank of America Corp and JPMorgan Chase & Co fell about 1 per cent each.

In yet another sign of slowing growth, economic bellwether FedEx Corp on Tuesday cut its 2019 profit forecast for the second time. However, expectations of the Fed remaining largely dovish and hopes of a resolution to the ongoing trade war between the United States and China have spurred a rally in stocks this year, with the S&P 500 now about 4 per cent away from its record closing high in September.

Investors will now keep a close watch on trade talks between the United States and China as top U.S. officials travel to Beijing to resume negotiations. President Donald Trump warned on Wednesday that Washington may leave tariffs on Chinese goods for a "substantial period" to ensure that Beijing complies with any trade agreement.

At 8:37 a.m. ET, Dow e-minis was down 101 points, or 0.39 per cent. S&P 500 e-minis was down 10.75 points, or 0.38 per cent and Nasdaq 100 e-minis were down 33 points, or 0.45 per cent. Among stocks, Biogen Inc tumbled 26.5 per cent after the drugmaker and its Japanese partner, Eisai Co Ltd, said they would discontinue two studies testing an Alzheimer's drug.

Micron Technology Inc rose 3.2 per cent after the chipmaker said it sees a recovery in the memory chip market coming. Boeing Co slipped 0.6 per cent after pressure mounted on the world's largest planemaker in Washington as U.S. lawmakers called for executives to testify about two crashed 737 MAX jets. Conagra Brands Inc jumped 7 per cent after the food packaging company's quarterly profit topped estimates.