Wall St set to open higher, focus on Fed Chair Powell's testimony

WASHINGTON: U.S. stock indexes were set to open higher on Monday as Treasury yields retreated further, ahead of Federal Reserve Chair Jerome Powell's testimony and jobs data this week that could offer fresh cues on the trajectory of interest rates.

The three main U.S. stock indexes rallied on Friday and notched weekly gains as yields pulled back from their peaks after comments from Fed policymakers calmed jitters around aggressive rate hikes.

The yield on U.S. 10-year Treasury notes slipped to 3.91%, its lowest since March 1, while the two-year yield inched down to 4.84% after touching its highest since 2007 last week.

Powell will be testifying before Congress on Tuesday and Wednesday and investors will watch for clues on the policy outlook, after recent strong economic data and hot inflation numbers fueled bets that the central bank could raise interest rates to a higher-than-expected level.

"Investors are bracing for Powell's comments tomorrow and I don't think he's going to say very much from what he has been saying all along. The Fed has been basically setting the stage for further rate hikes, perhaps beyond May and the market is well aware of that," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

Traders expect at least three more 25-basis-point hikes this year and see interest rates peaking at 5.44% by September from 4.67% now.

U.S. stocks have turned quite volatile in recent weeks after a strong performance at the start of this year as investors brace for the possibility of rates remaining higher for longer. The benchmark S&P 500 (.SPX) is up 5.4% so far this year after a 19.4% plunge in 2022.

Investors are awaiting factory orders data for January, due at 10:00 a.m. ET, to assess the impact of higher rates on the manufacturing sector.

At 8:27 a.m. ET, Dow e-minis were up 8 points, or 0.02%, S&P 500 e-minis were up 7.5 points, or 0.19%, and Nasdaq 100 e-minis were up 46.25 points, or 0.38%.

Shares of Apple Inc (AAPL.O) climbed 1.7% in premarket trading after Goldman Sachs initiated coverage on the iPhone maker with a "buy" rating.

U.S.-listed shares of Chinese companies Alibaba and PDD Holdings (PDD.O) fell 0.5% and 0.7%, respectively, after China set a modest annual economic growth target of about 5%, below market expectations of 5.5%-plus growth.

Shares of cryptocurrency-related companies fell after Silvergate Capital Corp (SI.N) pulled the plug on its crypto payments network, after raising doubts on the company's ability to stay in business. The California-based bank slid 8.3%, while peer Signature Bank (SBNY.O) declined 2.4%.