US STOCKS-Wall Street set to open lower as trade tensions weigh

Reuters

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    * U.S. consumer prices barely rise in May 
    * Expectations low for Trump-Xi talks, preparations limited
    * Trade-sensitive industrials, chipmakers drop
    * Mattel jumps on rejecting MGA Entertainment's offer
    * Futures off: Dow 0.21%, S&P 0.21%, Nasdaq 0.40% 

 (Updates prices, adds comments)
    By Shreyashi   Sanyal
    June 12 (Reuters) - Wall Street was set to open slightly
lower on Wednesday as worries of a protracted U.S.-China trade
war was heightened by Washington's tough stance, but losses were
limited by tame inflation data that supported the case for an
interest rate cut.
    Futures pared losses after data showed consumer prices edged
up 0.1% in May, in line with expectations of economists polled
by Reuters and pointing to moderate inflation. 
    Excluding the volatile food and energy components, the CPI
nudged up 0.1%.[ nLNSCHEF59]
    "We're not seeing much signs of creeping inflation, or at
least increasing inflation. That's one of the things that gives
the Federal Reserve to think about lowering rates later this
year," Art Hogan, chief market strategist at National Securities
in New York.
    "This is a market that would love to see us get back to the
negotiating table. The longer these trade tensions last, the
most damage it'll do to the economy, and therefore to 
earnings."
    Fresh worries erupted on the trade front after President
Donald Trump said he was holding up a trade deal with China and
had no interest in moving ahead unless Beijing agrees to four or
five major points. This led the blue-chip Dow index  .DJI  to
snap a six-day winning streak on Tuesday.  urn:newsml:reuters.com:*:nL2N23I153
    With under three weeks to go before proposed talks between
the United States and Chinese leaders, sources say there has
been little preparation for a meeting even as the health of the
world economy is at stake.  urn:newsml:reuters.com:*:nL2N23D13K
    Trump also said that interest rates were "way too high",
ahead of a reading on U.S. inflation that could shift the odds
towards a cut in rates as soon as July.  urn:newsml:reuters.com:*:nW1N1ZU02F    
    Hopes that the Federal Reserve will act to counter a slowing
global economy due to escalating trade war have spurred a rally
in stocks this month, with the S&P 500 index  .SPX  up about 5%
so far in June.
    Fed policymakers will meet on June 18-19 and markets have
priced in at least two rate cuts by the end of 2019. Fed fund
futures  FEDWATCH  imply around an 80% chance of an easing as
soon as July.
    Meanwhile, concerns of a slowdown in China rose as data
showed factory inflation slowed in May and the country reported
the worst-ever monthly sales drop.  urn:newsml:reuters.com:*:nL4N23H1U6  urn:newsml:reuters.com:*:nL4N23J1NN 
    At 8:50 a.m. ET, Dow e-minis  1YMc1  were down 56 points, or
0.21%. S&P 500 e-minis  ESc1  were down 6 points, or 0.21% and
Nasdaq 100 e-minis  NQc1  were down 30 points, or 0.4%.    
    Trade-sensitive Boeing Co  BA.N  dropped 0.5% in premarket
trading.
    Chipmakers and semiconductor equipment makers, which get a
sizeable portion of revenue from China, declined, with Micron
Technology Inc  MU.O , Nvidia Corp  NVDA.O  and Applied
Materials Inc  AMAT.O  trading down between 1.3% and 2.5%.      
 
    Qualcomm Inc  QCOM.O  dropped 2.5% after smartphone maker LG
Electronics Inc  066570.KS  and U.S. Federal Trade Commission
opposed the chip supplier's efforts to put a sweeping U.S.
antitrust decision on hold.  urn:newsml:reuters.com:*:nL2N23J00D
    In a bright spot, Mattel Inc  MAT.O  jumped 6.4% after the
toymaker rejected another merger offer from Bratz doll maker MGA
Entertainment Inc.  urn:newsml:reuters.com:*:nL4N23I4HD     

 (Reporting by Shreyashi Sanyal and Aparajita Saxena in
Bengaluru; Editing by Arun Koyyur)
 ((Shreyashi.Sanyal@thomsonreuters.com; +1 646 223 8780 ;
Reuters Messaging:
Shreyashi.Sanyal.thomsonreuters.com@reuters.net))

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