Economic news

Wall St Set to Drop at Open on Growth Worries

* Energy, bank stocks lead premarket declines

* All eyes on Fed’s policy meeting later this week

* Futures drop: Dow 2.00%, S&P 1.81%, Nasdaq 1.76% 

Sept 20 (Reuters) - Wall Street was set to tumble at the open on Monday, as concerns about the pace of an economic recovery hit energy and banking shares at the start of a week in which the Federal Reserve will decide on potentially tapering its pandemic-era stimulus.

Oil firms including Chevron and Exxon Mobil led declines in premarket trading, while economy-sensitive industrials 3M Co, Boeing Co and Caterpillar Inc slipped between 2.4% and 3.0%.

Economy-linked banking stocks including Morgan Stanley , JPMorgan Chase & Co and Bank of America Corp slid between 2.2% and 3%, tracking U.S. Treasury yields.

Wall Street’s main indexes have been hurt this month by fears of potentially higher corporate tax rates denting earnings and have shrugged off signs inflation might have peaked. The benchmark S&P 500 is on track to snap a seven-month gaining streak.

All eyes on Wednesday will be on the Fed’s policy meeting, where the central bank is expected to lay the groundwork for a tapering, although the consensus is for an actual announcement to be delayed until the November or December meetings.

“The wall of worry is simply getting higher,” said Sam Stovall, chief investment strategist at CFRA Research in New York.

“The stubbornly rising number of COVID Delta cases, the threat of a Fed tapering, the possibility of slower-than-expected economic growth and the newest concern is that Chinese real estate developer’s (default) could create some sort of a cascading financial effect.”

At 8:35 a.m. ET, Dow e-minis were down 689 points, or 2%, S&P 500 e-minis were down 80 points, or 1.81%, and Nasdaq 100 e-minis were down 270.5 points, or 1.76%.

Strategists at Morgan Stanley said they expected a 10% correction in the S&P 500 as the Fed starts to unwind its monetary support, adding that signs of stalling economic growth could deepen it to 20%.

The CBOE volatility index, known as Wall Street’s fear gauge, hit its highest level in more than four months.

Heavyweight technology-related stocks Microsoft Corp , Google-owner Alphabet Inc, Inc , Apple Inc and Tesla Inc, which tend to perform better during economic uncertainty, were down between 1.4% and 3.7%

Cruiseliners, slid about 3.6%, while carriers United Airlines, American Airlines and Delta Airlines dropped 2.9% as rising COVID-19 cases stoked fears of a delayed recovery in travel demand.

(Reporting by Devik Jain and Sagarika Jaisinghani in Bengaluru; Editing by Arun Koyyur and Maju Samuel)

Source: Reuters

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