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Wall St set to open lower as debt ceiling impasse keeps investors on edge


By Shreyashi Sanyal and Shristi Achar A

(Reuters) – U.S. stock indexes were set to open lower on Wednesday as yet another round of talks between the White House and Republican representatives over raising the debt ceiling failed to make a breakthrough, keeping investors on edge.

The lack of progress in talks to raise the $31.4 trillion borrowing limit ahead of the June 1 deadline has weighed on Wall Street, with its benchmark indexes ending the previous session sharply lower.

Shorter-dated Treasury yields continued to rise, with yields on the 1-month bond hitting another record high at 5.8920%, as worries about a possible government debt default rise.

“As we get closer to what the perceived deadline of the U.S. running out of cash, markets are going to get way more nervous if the standoff continues,” said Jamie Cox, managing partner at Harris Financial Group.

Investors also await minutes from the Federal Reserve’s May 2-3 meeting, due later in the day, to assess the central bank’s interest-rate path.

“We’re at this inflection point where there’s going to be disagreement at the FOMC, and you should probably start to see that show up in the minutes,” Cox said, adding that policymakers may be torn between fighting inflation and its impact on the economy following the banking crisis.

The Fed had hiked interest rates by 25 basis points in its May meeting.

At 8:37 a.m. ET, Dow e-minis were down 122 points, or 0.37%, S&P 500 e-minis were down 17.5 points, or 0.42%, and Nasdaq 100 e-minis were down 69.75 points, or 0.51%.

Meta Platforms Inc shares pared earlier losses, last down 0.6% premarket, as the Facebook owner began its final batch of layoffs.

Agilent Technologies Inc shares plunged 8.1% after the company cut its annual sales and profit forecasts.

Chipmaker Nvidia Corp fell 1.3% ahead of its quarterly earnings after markets close.

PacWest Bancorp rose 3.0% as the regional lender sold its property lending division to real estate financing firm Roc360, seeking to bolster confidence in its financial health.

Among mid-cap retail earnings, Kohl’s Corp advanced 12.1% as the department store chain reaffirmed its annual forecast even as first-quarter sales missed estimates.

Urban Outfitters Inc jumped 13.5% as the apparel retailer posted upbeat first-quarter results, boosted by strong demand and leaner inventory levels.

VF Corp gained 3.6% after beating fourth-quarter profit and sales estimates, helped by strong demand for its North Face brand.

Abercrombie & Fitch Co soared nearly 17% after the apparel retailer raised its annual sales forecast, betting on steady demand.

(Reporting by Shreyashi Sanyal and Shristi Achar A in Bengaluru; Editing by Vinay Dwivedi)

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