US STOCKS-Wall Street set for muted open with Powell in spotlight for rate outlook

By Niket Nishant and Purvi Agarwal

Sept 23 (Reuters) - Wall Street looked set for a subdued open on Tuesday as the recent tech-fueled rally took a breather, while investors awaited Federal Reserve Chair Jerome Powell's remarks on the economy amid conflicting signals from the central bank's policymakers.

Powell's comments could be crucial to shaping interest rate expectations at a time when the Fed's rate cut last week has lifted equities and investors are hoping for further reductions to sustain the rally.

Some officials argue for measured cuts going forward to keep inflation in check. But the newly appointed Fed Governor Stephen Miran said on Monday that the central bank risks harming the labor market if it holds back, highlighting the tightrope the Fed faces in balancing inflation against labor market pressures.

"The market is pricing two more cuts this year. That could potentially be at risk if there is a little bit of a hawkish tilt this week, especially from Powell," said Charlie Ripley, senior investment strategist for Allianz Investment Management.

At 8.21 a.m. ET, Dow e-minis YMcv1 were up 43 points, or 0.09%, U.S. S&P 500 E-minis EScv1 were down 2 points, or 0.03% and Nasdaq 100 E-minis NQcv1 were down 3 points, or 0.01%.

A September reading of S&P Global's flash manufacturing PMI is due after markets open. Comments from Fed Governor Michelle Bowman and Atlanta Fed President Raphael Bostic will also be parsed.

Part of Wall Street's resilience in September, a historically weak month for equities, can be traced to strength in technology stocks and renewed optimism around artificial intelligence-linked trading.

"The companies that are doing the best in the S&P 500 have an AI-related tilt. It doesn't appear to be ending anytime soon," Ripley said.

Some analysts have, however, raised concerns of stretched stock valuations. Nvidia NVDA.O slipped nearly 1% in premarket trading on Tuesday after hitting an intraday record high in the previous session.

Others argued that markets could sustain their current multiples if the upcoming earnings season passes without any red flags.

"An accommodative Fed and an economy that accelerates into 2026 should allow the market to maintain its current multiple, leaving earnings growth to drive continued U.S. equity gains," Goldman Sachs analysts wrote in a note.

During the past 40 years, the S&P 500 has generated a 15% median 12-month return when the Fed resumed cutting rates against a backdrop of continued economic growth.

However, uncertainty around the Trump administration's policy continues to pose risks. Kenvue KVUE.N, the maker of popular pain medication Tylenol, rose 4.6% premarket but is yet to fully recover from a 7.5% plunge on Monday when the U.S. president linked autism to childhood vaccine use and the taking of Tylenol by women when pregnant.

Boeing BA.N gained 2.3% before the bell after securing an order from Uzbekistan Airways worth over $8 billion, while talks for a Chinese order were ongoing.

Lam Research LRCX.O fell 1.7% after KeyBanc downgraded the chipmaking tools supplier's rating to "sector weight" from "overweight".

Investors will also be watching for potential disruptions from H-1B visa regulations, particularly in U.S. technology companies.