US STOCKS-Wall Street set to drop as tech selloff extends, rate cut hopes fade

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

Updates prices, analyst comment before the bell

By Twesha Dikshit and Purvi Agarwal

Nov 14 (Reuters) - Wall Street was poised to open in the red on Friday, driven by a renewed selloff in technology stocks, while hawkish comments from Federal Reserve officials added to doubts about an interest rate cut in December.

The three major U.S. stock indexes posted their steepest one-day declines in over a month on Thursday, with heavyweight tech stocks leading the slump, after a growing number of Fed policymakers signaled reticence on further easing.

Worries about stretched AI stock valuations have led to several bouts of selloff in recent weeks and put the Nasdaq on course for a second consecutive week of losses.

"People have seen the over valuation story, it has been there for a while, but they are finally acting on it ... momentum trade is starting to unwind," said Joe Saluzzi, partner and co-founder at Themis Trading.

"When it does go down like you're seeing this morning, they're going to take them all out. There's no safety trade there."

Applied Materials AMAT.O shares dropped 7.4% in premarket trading after the company flagged expectations of weaker China spending next year on tighter U.S. export control curbs.

Megacap technology stocks were lower, with the Roundhill Magnificient Seven ETF MAGS.K down 2.4%.

At 8:42 a.m. ET, Dow E-minis YMcv1 were down 370 points, or 0.78%, S&P 500 E-minis EScv1 were down 77.25 points, or 1.14% and Nasdaq 100 E-minis NQcv1 were down 404.5 points, or 1.61%

The CBOE volatility index .VIX, Wall Street's fear gauge, touched a one-week high earlier and was last up 2.8 points at 22.8.

Fed speakers on Thursday added to dimming expectations of policy easing. St. Louis President Alberto Musalem said caution was needed, while Cleveland's head, Beth Hammack, said restrictive policy would help tackle inflation. Minneapolis' Neel Kashkari told Bloomberg News he had been against October's rate cut.

Investors will parse through a fresh set of commentary from Fed officials through the day.

Expectations for a 25 point rate cut in December fell to 53% from last week's 67%, according to CME Group's FedWatch tool.

The historic U.S. government shutdown, which ended on Thursday, led to an economic data drought, leaving the Fed and traders flying blind and rekindled concerns about the health of the labor market and the inflation outlook.

Despite the reopening, some data gaps are likely to be permanent with the White House casting doubt on employment and Consumer Price Index reports for October ever being released.

Among others, Walmart WMT.N was down 2.8% after announcing that CEO Doug McMillon would retire next year.

Chipmakers fell, with AI bellwether Nvidia NVDA.O down 3.2%. Broadcom AVGO.O, Intel INTC.O and Advanced Micro Devices AMD.O fell between 2.6% and 4.1%.

Nvidia's results next week could further break or make the rally that has been the main driver behind indexes hitting all-time record highs this year.

Warner Bros Discovery WBD.O shares gained 2.2%. The entertainment company said it had amended CEO David Zaslav's employment agreement amid a strategic review of its business.

Cidara Therapeutics CDTX.O more than doubled after Merck MRK.N said it will acquire the company in a nearly $9.2 billion deal, gaining access to an experimental drug for flu prevention.

(Reporting by Twesha Dikshit and Purvi Agarwal in Bengaluru; Editing by Maju Samuel)

((Twesha.Dikshit@thomsonreuters.com;))