By Sruthi Shankar and Amruta Khandekar
(Reuters) -Wall Street was set to open marginally lower on Monday as investors awaited a crucial inflation reading and other economic data this week that could shape expectations around how long the Federal Reserve will keep interest rates elevated.
The benchmark S&P 500 and the blue-chip Dow closed at near eight-week highs on Friday, while the tech-heavy Nasdaq Composite hit a two-month peak as megacap stocks rallied on the back of easing Treasury yields.
Investors will focus on a slew of economic data this week as well as speeches from Fed officials for clues on the trajectory of interest rates amid growing expectations that the Fed is done hiking borrowing costs.
Data on Tuesday is expected to show headline consumer prices eased to 3.3% in October from 3.7% in September. However, core prices that exclude volatile food and energy components are seen unchanged from the previous month.
"If the year-over-year (number) continues to show a decline, then that seals the fact that the Fed is not going to raise in December and most likely they're done with the hiking campaign," said Peter Cardillo, chief market economist at Spartan Capital Securities.
The major U.S. stock indexes have rebounded strongly this month, fueled by a stronger-than-expected earnings season and on hopes that U.S. interest rates are near their peak, though investors have pushed back bets of rate cuts to June from May.
Traders have priced in a nearly 86% chance that the Fed will hold interest rates in December.
Adding to early weakness on Monday, Moody's lowered its outlook on the U.S. credit rating to "negative" from "stable", citing large fiscal deficits and a decline in debt affordability.
"With the absence of macro news and the strong rally that we had on Friday, the downgrade and the anticipation of the inflation data is inducing some selling this morning," Cardillo said.
Moody's move, which follows a rating downgrade of the sovereign by Fitch this year, had little impact on the Treasury market.
The benchmark U.S. 10-year Treasury yield was largely steady at 4.640%, below a 16-year peak hit last month partly due to concerns over government spending.
U.S. House of Representatives Speaker Mike Johnson unveiled a Republican stopgap spending measure on Saturday aimed at averting a government shutdown on Friday, but the measure quickly ran into opposition from lawmakers from both parties in Congress.
At 8:33 a.m. ET, Dow e-minis were down 33 points, or 0.1%, S&P 500 e-minis were down 6 points, or 0.14%, and Nasdaq 100 e-minis were down 30 points, or 0.19%.
Boeing climbed 3.4% premarket after Bloomberg News reported that China is considering resuming purchases of 737 Max aircraft when the U.S. and Chinese presidents meet this week at the APEC summit.
Meanwhile, Dubai's Emirates placed an order for 90 more Boeing 777X jets at the opening of the Dubai Airshow.
Tyson Foods fell 3.6% after the U.S. meatpacker issued a downbeat revenue forecast for next fiscal year after falling chicken and pork prices and slowing demand for its beef products hurt fourth-quarter sales.
(Reporting by Sruthi Shankar and Amruta Khandekar in Bengaluru; Editing by Maju Samuel)
