Wall Street set for muted open after strong comeback

(Reuters) – Wall Street’s main indexes were set for a muted open on Monday after logging their best week in six, as investors geared up for the Federal Reserve’s meeting this week amid caution over rising borrowing costs spurred by massive fiscal stimulus.

FILE PHOTO: A Wall St. street sign is seen near the New York Stock Exchange (NYSE) in New York City, U.S., September 17, 2019. REUTERS/Brendan McDermid

Southwest Airlines Co and JetBlue Airways Corp rose 1.6% and 3% in premarket trading as the carriers pointed to a steady rise in leisure bookings amid signs of a slowing pandemic.

Other travel-related stocks Carnival Corp, United Airlines Holdings and MGM Resorts gained between 1.4% and 3%.

The S&P 500 notched a record high for the first time in nearly a month last week as approval of one of the largest fiscal stimulus packages in U.S. history and vaccine rollouts fueled demand for economy-linked stocks such as banks, energy, materials at the cost of tech names with lofty valuations.

The major U.S. stock indexes were roiled in recent weeks as a spike in longer-dated U.S. bond yields due to fears of an increase in inflation and, in response, a tapering of the Fed’s easy monetary policy worried investors.

“The U.S. economy looks in a better shape than most other developed economies,” said Hussein Sayed, chief market strategist at FXTM.

“Despite the rosier economic outlook, this week’s Fed meeting is expected to be absent of major policy changes.”

At the end of Fed’s two-day meeting on Wednesday, policymakers are expected to forecast that the U.S. economy will grow in 2021 at the fastest rate in decades while reiterating their dovish stance for the foreseeable future.

The yields on benchmark 10-year Treasuries hovered near their 13-month high at 1.61%, slightly lower than its peak of 1.64% hit on Friday.

At 8:48 a.m. ET, Dow E-minis were up 43 points, or 0.13%, S&P 500 E-minis were down 4.5 points, or 0.11% and Nasdaq 100 E-minis were down 13.75 points, or 0.1%.

Facebook Inc, Tesla Inc, Amazon.com Inc, Netflix Inc and Microsoft fell between 0.1% and 0.6%.

Tesla added “Technoking of Tesla” to billionaire Chief Executive Elon Musk’s list of official titles on Monday in a formal regulatory filing that also named finance chief Zachary Kirkhorn “Master of Coin”.

Eli Lilly and Co shares dropped 6.4% after “mixed” results from the drugmaker’s mid-stage trial testing its experimental drug to treat Alzheimer’s cast a doubt on the chances for the drug’s accelerated approval, according to analysts.

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