US STOCKS-Wall St set for opening losses as fears about hawkish Fed grow

(For a Reuters live blog on U.S., UK and European stock markets, click or type LIVE/ in a news window.)

*

VIX trades above 20 for a second day

*

Moderna slides after mixed data from flu vaccine trial

*

DoorDash climbs on buyback, strong outlook

*

Futures down: Dow 0.43%, S&P 0.62%, Nasdaq 0.82%

(Adds comment, updates prices)

By Johann M Cherian and Sruthi Shankar

Feb 17 (Reuters) – U.S. equity indexes were set for a lower open on Friday on fears that accelerating inflation in the face of a sturdy U.S. economy could prompt the Federal Reserve to err on the side of caution by keeping monetary policy restrictive through the year.

Stock markets were volatile this week after economic data pointed to elevated U.S. inflation, a tight job market and resilience in consumer spending, all factors that could provide more room for the Fed to raise borrowing costs.

Goldman Sachs said it was expecting the Fed to raise rates three more times this year and by a quarter of a percentage point each. Traders are expecting at least two more rate increases and a terminal rate of 5.3% by July.

“We’ve seen the rates market catch up to the Fed commentary, and the really robust data in the U.S. was the catalyst for equities to pay attention,” said Laura Cooper, senior macro strategist at BlackRock.

“We’re reaching an inflection point where further rate hikes being priced in will be a negative for equity markets because the data suggests that inflation risks are tilted to the upside.”

All three main indexes clocked their worst annual losses in 2022 since the 2008 financial crisis, dented by the Fed’s fastest monetary tightening in four decades.

After a respite in January on hopes that the central bank might be nearing the end of its rate-hike cycle, the indexes have wavered this month. The CBOE Volatility index, also known as Wall Street’s fear gauge, traded above 20 points for a second session in a row.

At 8:38 a.m. ET, Dow e-minis were down 145 points, or 0.43%, S&P 500 e-minis were down 25.25 points, or 0.62%, and Nasdaq 100 e-minis were down 102.25 points, or 0.82%.

Story continues

Traders will parse commentary by central bank officials including Richmond Fed President Thomas Barkin and Governor Michelle Bowman later in the day to assess the tone of Fed’s monetary policy outlook.

Moderna Inc fell 4.9% in premarket trading after the drugmaker said its experimental messenger RNA-based influenza vaccine failed to show it was at least as effective as an approved vaccine versus less prevalent influenza B.

Manchester United rose 2.3% after hitting a record close in the previous session. The Telegraph reported on Thursday that Saudi Arabia has submitted a bid for the British soccer club ahead of Friday’s deadline.

DoorDash Inc climbed 3.5% after the food delivery company said it would buy back $750 million worth of stock and projected a key profit measure above Wall Street estimates. (Reporting by Johann M Cherian and Sruthi Shankar in Bengaluru; Editing by Alden Bentley and Anil D’Silva)