(Reuters) – Wall Street was set to open lower on Tuesday, weighed down by losses in Home Depot and Caterpillar shares, with focus also on Federal Reserve Chair Jerome Powell’s testimony on monetary policy.
Shares of the largest U.S. home improvement retailer fell 3.3 percent in premarket trading after the company issued a disappointing full-year earnings forecast amid slowing momentum in the U.S. housing market. Smaller rival Lowe’s Co Inc also fell 1.9 percent.
A report from the Commerce Department further underscored weakness in homebuilding, which tumbled to a more than two-year low in December and added to losses in futures.
Caterpillar Inc shares took a hit, falling 3.8 percent, after brokerage UBS double downgraded the company’s shares to “sell” as it expects downward earnings revisions.
“Caterpillar and Home Depot certainly give some concern to investors that maybe the recovery in stock prices came in too quickly,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.
“But now the markets are considerably higher than it was at the start of the year and the focus is more on whether it has risen too far too fast.”
U.S. stocks have been bolstered in recent weeks by trade optimism and dovish signals from the Fed, with the benchmark S&P 500 index about 4.8 percent away from its record closing high in September.
At 8:41 a.m. ET, Dow e-minis were down 119 points, or 0.46 percent. S&P 500 e-minis were down 6.75 points, or 0.24 percent and Nasdaq 100 e-minis were down 28.75 points, or 0.4 percent.
Investors will keep a close watch on Powell’s testimony On Tuesday, especially after the central bank last month shifted to a more cautious stance on further interest rate hikes.
“A cautious mood develops ahead of Powell’s testimony on monetary policy to the U.S. Senate Committee, as he will be drilled during the Q&A session,” said Peter Cardillo, chief market economist at Spartan Capital Securities in a client note.
Healthcare stocks could face some turbulence later in the day, as top executives from some of the largest drug companies are expected to get grilled in the U.S. Senate on the high cost of prescription drugs.
Wall Street ended higher on Monday after President Donald Trump said he would delay a planned hike in tariffs on Chinese imports.
Among gainers, AutoZone Inc jumped 9.6 percent after the auto parts retailer posted better-than-expected quarterly same-store sales.
J.M. Smucker Co rose about 6 percent after the packaged food maker reported quarterly sales above Wall Street estimates. Separately, the Conference Board’s consumer confidence index likely rose to 124.7 this month, from a reading of 120.2 in January. The report is expected at 10 a.m. ET.