US STOCKS-Wall Street heads for weak open as yields rise again
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Novavax slumps on flagging going concern doubts
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Kohl's slides after gloomy forecast
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ISM factory activity data at 10:00 am ET
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Futures down: Dow 0.19%, S&P 0.19%, Nasdaq 0.13%
(Changes analyst's quote, Updates prices)
By Sruthi Shankar and Shristi Achar A
March 1 (Reuters) - Wall Street's main indexes were set to come under pressure on Wednesday, with stock futures reversing early gains, as higher Treasury yields offset a boost from a jump in China's manufacturing activity.
The main U.S. benchmarks ended February with declines as investors braced for the possibility that the Fed will hike rates more than initially thought on signs of resilience in the economy.
The yield on two-year Treasury notes, which closely track short-term interest rate expectations, rose to 4.83% on Wednesday, having hit a four-month high of 4.86% earlier in the session.
"The market is still in a wait-and-see mode. It doesn't know if yields are going to take off and have another huge move higher or if this is just a little counter-trend rally and that's why you see a lot of uncertainty," said Adam Sarhan, chief executive officer of 50 Park Investments.
Traders are pricing in expectations that the Fed will raise rates in coming months to a 5.25%-5.50% range, from the current 4.50%-4.75% range. That's higher than where Fed policymakers in December signaled they would need to raise the policy rate.
U.S. monthly payrolls and consumer prices reports in the coming days will further help investors gauge the path of interest rates ahead of the Fed's March 21-22 meeting.
Money market traders see an about 80% chance of a 25-basis-point rate hike later this month, but the odds of a bigger 50 bps rate hike have grown recently.
Futures were higher earlier after data showed China's manufacturing activity expanded at the fastest pace in more than a decade.
At 8:55 a.m. ET, Dow e-minis were down 62 points, or 0.19%, S&P 500 e-minis were down 7.75 points, or 0.19%, and Nasdaq 100 e-minis were down 15.5 points, or 0.13%.
The Institute for Supply Management's factory activity data for February is due at 10:00 a.m. ET. Minneapolis Fed President Neel Kashkari, a voter in the rate-setting committee in 2023, will speak before the opening bell.
Novavax Inc slumped 26.3% in premarket trading after the COVID-19 vaccine maker raised doubts about its ability to remain in business and announced plans to slash spending as it prepares for a fall vaccination campaign.
AMC Entertainment Holdings Inc slid 5.2% after the theater chain posted a more than 15% fall in fourth-quarter revenue.
Kohl's Corp fell 7.8% as the retailer forecast full-year profit below analysts' estimates due to weak demand for clothing and accessories.
Tesla Inc inched up 0.3% ahead of its investor day event. The electric automaker is readying a production revamp of its top-selling Model Y, Reuters reported, citing people familiar with the plan. (Reporting by Sruthi Shankar and Shristi Achar A in Bengaluru; Editing by Arun Koyyur and Sriraj Kalluvila)
