By Sruthi Shankar and Johann M Cherian
(Reuters) -Wall Street was set for a muted open on Monday, pressured by investor fears the Federal Reserve's aggressive monetary tightening will hurt the U.S. economy and a drop in Pfizer after its decision to drop the development of a weight loss drug.
Geopolitical uncertainties also clouded the global mood after an aborted revolt by Russian mercenaries over the weekend raised concerns over the stability of President Vladimir Putin and a potential disruption to Russian oil supply.
A recent rally in U.S. stocks sputtered last week after Fed Chair Jerome Powell's testimony signaled more interest rate hikes ahead.
Most policymakers see at least two more quarter-point rate increases by the end of this year, though traders expect one more hike in July and see the U.S. central bank holding rates steady through the end of 2023, according to CMEGroup's Fedwatch tool.
"The way investors buy or sell right now is going to be relative to the assumption that they're going to get a rate hike at the end of the next month," said Randy Frederick, vice president of trading and derivatives for Charles Schwab (NYSE:SCHW).
"All of the data we get between now and then, especially the labor market data and the inflation data will have an impact on that."
The tech-heavy Nasdaq snapped its eight-week winning streak on Friday, its longest since March 2019, while the benchmark S&P 500 broke its five-week rally, its longest since November 2021.
Market participants are awaiting a slew of economic data including a key inflation gauge, durable goods and University of Michigan's consumer sentiment index, and cues from Powell's speech later this week.
"There's still a bit of a concern by investors that the Fed is going to overdo it," said Sam Stovall, chief investment strategist at CFRA Research in New York.
The CBOE Market Volatility index, a gauge of investor anxiety, was up 0.90 points at 14.35, its highest levels in nearly a week.
At 8:12 a.m. ET, Dow e-minis were down 12 points, or 0.04%, S&P 500 e-minis were down 3.25 points, or 0.07%, and Nasdaq 100 e-minis were down 13.5 points, or 0.09%.
Among single stocks, Pfizer Inc (NYSE:PFE) fell 2% in premarket trading after the drugmaker said it is discontinuing the development of an experimental obesity and diabetes drug due to elevated liver enzymes in patients in clinical studies.
Alphabet (NASDAQ:GOOGL) Inc slipped 1.4% after UBS downgraded the stock to "neutral", while Tesla (NASDAQ:TSLA) Inc fell 2.2% after Goldman Sachs (NYSE:GS) cut the electric car maker's rating to "neutral".
Lucid Group (NASDAQ:LCID) jumped 10.4% after entering into an agreement with UK's Aston Martin that will give the electric vehicle maker a 3.7% stake in the company.
PacWest added 7.9% after private-equity firm Ares Management said it had acquired a $3.5 billion specialty finance loan portfolio from the lender.