(Reuters) -Wall Street’s main indexes were set to open lower on Tuesday after Treasury Secretary Janet Yellen said the U.S. government could run out of money within a month, while investors awaited the Federal Reserve’s policy decision.
The cost of insuring against a U.S. default hit fresh highs as Yellen said the government will be unlikely to meet all payment obligations by “early June”, prompting President Joe Biden to summon four top congressional leaders to the White House next week.
“The consensus view is we will get some resolve on this … but the closer we get to that deadline without a resolve, there is a likelihood that this becomes more precarious for equity markets increases,” said Art Hogan, chief market strategist at B. Riley Wealth.
The U.S. central bank is expected to deliver a 25-basis-point rate increase on Wednesday and then hold rates steady for the rest of 2023, according to a Reuters poll.
“In large part, we’re looking at another wait-and-see day until we get to the Fed meeting and we can start reacting in a more intuitive fashion,” Hogan added.
Worries about an economic downturn and concerns about stress in the banking sector have fueled expectations of rate cuts in the latter half of the year.
However, with inflation running well over the central bank’s 2% target and a still-strong labor market, chances of rate cuts seem less likely.
U.S. stocks ended little changed on Monday following First Republic Bank (NYSE:FRC)’s weekend auction that led to a rout in the regional bank shares, while JPMorgan Chase & Co (NYSE:JPM) gained after the largest U.S. bank picked up the beleaguered lender’s assets.
With Monday’s manufacturing data giving the Fed enough room for more near-term tightening, all eyes will be on jobs and factory orders data after the opening bell.
At 8:43 a.m. ET, Dow e-minis were down 79 points, or 0.23%, S&P 500 e-minis were down 7.5 points, or 0.18%, and Nasdaq 100 e-minis were down 6 points, or 0.05%.
Analysts expect first-quarter earnings for S&P 500 companies to fall 1.9% from a year earlier following better-than-expected reports from some technology and growth giants, marking a dramatic improvement from the 5.1% drop expected at the start of April, according to Refinitiv data.
Pfizer Inc (NYSE:PFE) climbed 0.9% in premarket trading after its first-quarter profit beat estimates, boosted by strong demand for its recently acquired products and pneumococcal vaccines.
Uber Technologies (NYSE:UBER) Inc jumped 9.5% as the ride-hailing firm forecast quarterly core earnings above estimates. Smaller rival Lyft Inc (NASDAQ:LYFT) added 2.9%.
Educational services company Chegg (NYSE:CHGG) tanked 45.6% on a downbeat second-quarter revenue forecast on increasing competition from ChatGPT.
Icahn Enterprises LP dropped 11% after U.S. short seller Hindenburg Research said it has a short position in activist investor Carl Icahn-controlled energy-to-pharma conglomerate.
