By Bansari Mayur Kamdar and Johann M Cherian
(Reuters) -Wall Street was set to open lower on Thursday as data signaling a resilient labor market and hawkish minutes of the Federal Reserve's June meeting fanned fears the central bank could keep interest rates higher for longer.
Private payrolls increased more than expected in June, the ADP National Employment report showed on Thursday, indicating the labor market remained strong despite growing risks of a recession from higher interest rates.
Another survey showed the number of Americans filing new claims for unemployment benefits increased moderately last week.
Expectations of another rate hike by the Fed to tame stubbornly high inflation led a closely watched part of the U.S. Treasury yield curve to its deepest inversion since 1981 on Monday, once again putting a spotlight on what many investors consider a recession signal.
"The big news is the Fed and the likelihood that they will raise rates at the July meeting," said Sam Stovall, chief investment strategist at CFRA Research.
Dallas Fed President Lorie Logan, a voting member of the Fed's rate-setting committee, said on Thursday "it would have been entirely appropriate" to raise rates at the June policy meeting itself.
U.S. stock indexes had slipped in the previous session after the Fed minutes showed a vast majority of the policymakers expected further policy tightening, even as they agreed to hold rates steady in June.
"Investors are using concerns around interest rates and the inverted yield curve as reasons to take some near-term profits from the recent advance in the equity market," Stovall added.
Most tech and growth megacaps, whose valuations come under pressure when borrowing costs rise, fell in premarket trading, with Alphabet and Tesla down 1.4% and 1.3% respectively.
After a dismal 2022, big growth and technology stocks have seen outsized gains so far this year, with the Nasdaq Composite clocking its best first-half in 40 years.
Meta Platforms rose 0.6% as it took aim at Twitter with its Threads app that attracted millions of users within hours of its launch on Wednesday.
At 8:49 a.m. ET, Dow e-minis were down 281 points, or 0.81%, S&P 500 e-minis were down 39.25 points, or 0.88%, and Nasdaq 100 e-minis were down 168.5 points, or 1.1%.
Investors also await job openings and labor turnover survey and the Institute for Supply Management's non-manufacturing purchasing managers' index reading, due later in the day, ahead of the highly anticipated jobs data on Friday.
Among other movers, chipmakers Qualcomm and Intel extended declines, dropping more than 1.8% each, as the trade war between Beijing and Washington escalated after China restricted exports of metals used in semiconductors on Monday.
Meanwhile, U.S. Treasury Secretary Janet Yellen began her four-day visit to Beijing amid skepticism over a productive outcome.
Exxon Mobil eased 2.1% on signaling a sharp drop in second-quarter operating profit on lower natural gas prices and weaker oil refining margins, according to a regulatory filing.
JetBlue Airways fell 1.8% after the company said it would follow a U.S. judge's May order to end an alliance with American Airlines to protect a planned $3.8 billion purchase of Spirit Airlines.
(Reporting by Bansari Mayur Kamdar and Johann M Cherian in BengaluruEditing by Vinay Dwivedi)
