By Shreyashi Sanyal and Sabahatjahan Contractor
(Reuters) -Wall Street’s main indexes were set to open lower on Friday at the end of a choppy week marked by little progress in peace talks to end the war in Ukraine and the first U.S. interest rate hike since 2018.
The broad declines could snap a three-day rally that has put the S&P 500 index and the Dow Jones Industrial Average on track for their best week since November 2020.
“The fact that we’ve had three very strong up days in a row… it’s very common to see things moving in you know and pull back just a little bit,” Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.
Markets also awaited updates on U.S. President Joe Biden’s talk with Chinese president Xi Jinping, as Washington warned that Beijing will pay a price if it supports Russia’s military operations in Ukraine.
Meanwhile, Russia fired missiles at an airport near Lviv on Friday as Moscow tries to regain the initiative in its stalled campaign in Ukraine.
Markets digested the fast-paced developments around the conflict and the Fed’s widely-expected move on Wednesday to raise its key lending rate by a quarter of a percentage point to fight decades-high inflation. Policymakers also forecast an aggressive plan for further hikes while trimming economic growth projections for the year.
“We prefer a hedging strategy and selective equity exposure over exiting risk assets,” wrote Mark Haefele, chief investment officer at UBS Global Wealth Management in a client note.
“Energy stocks provide a hedge against risks arising from the war in Ukraine, while financials and value stocks tend to outperform in periods of rising rates.”
At 8:43 a.m. ET, Dow e-minis were down 141 points, or 0.41%, S&P 500 e-minis were down 23 points, or 0.52%, and Nasdaq 100 e-minis were down 82.75 points, or 0.59%.
The day also marks “triple witching”, where investors unwind positions in futures and options contracts before they expire which often leads to large unexpected moves in markets.
Shares of Boeing Co rose 1.6% in premarket trading as it closed in on a landmark order from Delta Air Lines for up to 100 of its 737 MAX 10 jets, people familiar with the matter said.
U.S. delivery firm FedEx Corp fell 2.7% as it posted lower-than-expected quarterly earnings on Thursday, while video game retailer GameStop Corp tumbled 9.6% on reporting a net loss for the fourth quarter.
(Reporting by Shreyashi Sanyal and Sabahatjahan Contractor in Bengaluru; Editing by Sriraj Kalluvila)