NEW YORK, March 5 — Wall Street was set to open lower today as megacap stocks were under pressure ahead of a slew of economic data and several key events this week, including appearances from Federal Reserve Chair Jerome Powell.

An AI-fueled rally on Wall Street ran out of steam at the start of this week as focus turns to fresh cues on the Fed’s monetary policy path after signs of sticky inflation in February dampened hopes of early interest rate cuts.

The benchmark S&P 500 hit a fresh intraday record high yesterday before closing slightly lower in the run up to Powell’s testimony before lawmakers tomorrow and Thursday.

"I think he’s going to continue to reiterate that the narrative is going to be rate cuts may be coming (but) there’s no immediate plan to cut them. Thus you see some of the angst in the tech space,” said Ken Polcari, chief market strategist at Slatestone Wealth.

Apple slid 2.2 per cent premarket after a research report showed iPhone sales in China fell 24 per cent year-on-year in the first six weeks of 2024 as the US company faced increased competition from domestic rivals such as Huawei.

Other megacap growth and technology stocks also declined, with Tesla down 2.5 per cent after its European Gigafactory near Berlin halted production after a suspected arson attack.

AI-darling Nvidia bucked the trend to rise 1.4 per cent.

A reading on the US services sector for February and factory orders data for January due at 10:00 a.m. ET could provide further insight into the health of the US economy and the outlook for rates.

A raft of employment data, including the crucial nonfarm payrolls report, is also due in the coming days.

Traders see a 65.5 per cent chance of the first rate cut this year arriving in June, as per CME Group’s FedWatch tool.

The Fed is under no urgent pressure to cut interest rates given a "prospering” economy and job market, Atlanta Fed President Raphael Bostic said in remarks on Monday, adding to worries about rates being higher-for-longer.

Investors will be closely looking at speeches by other Fed policymakers including Vice Chair for Supervision Michael Barr, who is due to speak later in the day.

Among major movers, Target jumped 7.7 per cent in premarket trading after the big-ticket retailer forecast annual comparable sales largely above estimates, betting on same-day services, product launches and a new membership program to boost spending.

At 8:20 a.m. ET, Dow e-minis were down 96 points, or 0.25 per cent, S&P 500 e-minis were down 15.25 points, or 0.3 per cent, and Nasdaq 100 e-minis were down 93.5 points, or 0.51 per cent.

Advanced Micro Devices fell 1.5 per cent after a report that the chipmaker hit a US government roadblock in its efforts to sell an artificial intelligence chip tailored for the Chinese market.

Microstrategy shed 2.7 per cent after the bitcoin development company announced a private offering for $600 million in convertible senior notes, with proceeds to be used to buy bitcoin.

Other major cryptocurrency-linked firms such as Riot Platforms and Marathon Digital fell 1.7 per cent and 2.9 per cent, respectively, with bitcoin hovering below a two-year peak. — Reuters