Wall St eyes lower open as Fed worries weigh; PayPal climbs

U.S. stock indexes were set to open lower on Tuesday following hawkish commentary from some Federal Reserve officials last week, while PayPal climbed after agreeing to sell a part of its European buy now, pay later loans.

The S&P 500 (.SPX) and the Nasdaq (.IXIC) ended lower on Friday, weighed by declines in market heavyweights as comments from Fed officials curtailed optimism that the central bank was nearing the end of its aggressive interest rate hikes.

Fed Governor Christopher Waller warned on Friday “core inflation is not coming down like I thought it would.” Richmond Fed President Thomas Barkin said he was “comfortable” with further rate increases given that inflation was still not on the path back to 2%.

Traders see a 74% chance of just one 25-basis-point rate hike this year, expected in July, even as the U.S. central bank has signaled that borrowing costs could rise as much as half a percentage point by year-end, according to CMEGroup’s Fedwatch Tool.

Investors are looking ahead to comments from Fed Vice Chair Michael Barr later in the day, and Fed Chair Jerome Powell’s semiannual monetary policy testimony to the U.S. House Financial Affairs Committee on Wednesday.

“Investors are starting off a new holiday shortened week coming off of strong gains, and looking ahead to a couple of days of Powell on Capitol Hill,” said Art Hogan, chief market strategist at B Riley Wealth.

This report’s information was first seen on REUTERS; to read more, click this link.