US STOCKS-Wall St set for muted open after glum China data

BY Reuters | ECONOMIC | 05/16/22 08:56 AM EDT

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* Spirit Airlines (SAVE) surges after JetBlue (JBLU) launches hostile takeover

* Futures: Dow up 0.13%, S&P flat, Nasdaq off 0.08% (Adds comment, details; updates prices)

By Amruta Khandekar

May 16 (Reuters) - Wall Street's main indexes were set for a subdued open on Monday as investors digested downbeat data out of China amid worries over a global economic slowdown and aggressive policy tightening by the Federal Reserve.

Chinese and European stock markets fell, while oil slid as data showed China's economic activity cooled sharply in April as widening COVID-19 lockdowns took a heavy toll on consumption, industrial production and employment.

Wall Street closed sharply higher on Friday, but still the S&P 500 and the Nasdaq indexes posted their longest weekly losing streaks in over a decade.

"Investors are just a little bit skeptical. They're just sort of testing the waters to see if the rally is going to continue or revert back down," said Robert Pavlik, senior portfolio manager at Dakota Wealth Management.

"We're clearly not out of the woods as far as the economy is concerned. We haven't seen a peak it appears on inflation, so we can retest those lows and possibly move even lower."

Investors have been worried that aggressive interest rate hikes by the Fed to combat decades-high inflation could tip the U.S. economy into recession, with the conflict in Ukraine, supply chain snarls and the latest pandemic-related lockdowns in China exacerbating the situation.

Goldman Sachs economists cut their forecast for U.S. GDP growth to 2.4% in 2022 from 2.6% previously, citing tighter financial conditions.

The S&P 500 and the tech-heavy Nasdaq have fallen 15.6% and 24.5%, respectively, so far this year, with growth stocks taking a sharp blow on concerns that bigger interest rate hikes could hurt their future cash flows.

Traders are now pricing a near 82% chance of a 50 basis point hike by the Fed in June.

Major tech and growth companies such as Microsoft Corp (MSFT) , Google owner-Alphabet Inc (GOOG), Amazon.com (AMZN) , Apple Inc (AAPL), Meta Platforms (FB) and Nvidia Corp (NVDA) slipped in premarket trading.

Netflix Inc (NFLX) rose 2.9% after Wedbush upgraded the streaming pioneer's stock to "outperform" from "neutral".

Big banks were mixed, with Morgan Stanley (MS) up 0.5%.

At 8:29 a.m. ET, Dow e-minis were up 42 points, or 0.13%, S&P 500 e-minis were down 0.75 points, or 0.02%, and Nasdaq 100 e-minis were down 10 points, or 0.08%.

Focus is now on the retail sales report due on Tuesday, after worrying inflation and consumer sentiment data last week.

Retailers such as Walmart Inc (WMT), Home Depot (HD) and Target Corp (TGT) are due to report their quarterly results this week.

Spirit Airlines (SAVE) jumped 15.4% after JetBlue Airways (JBLU) launched a hostile all-cash takeover bid for the discount carrier. JetBlue (JBLU) shares slipped 1.4%. Shares of rival bidder Frontier Group Holdings (ULCC) gained 4.5%. (Reporting by Amruta Khandekar and Devik Jain in Bengaluru; Editing by Shounak Dasgupta and Sriraj Kalluvila)

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