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Nasdaq closed above 17,000 for first time on Tuesday

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Airlines fall after American Airlines ( AAL ) cuts profit forecast

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Abercrombie & Fitch ( ANF ) up on raising annual sales growth

forecast

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Futures down: Dow 0.58%, S&P 0.61%, Nasdaq 0.67%

(Updated at 8:26 am ET/1226 GMT)

By Johann M Cherian and Lisa Pauline Mattackal

May 29 (Reuters) - Wall Street was on track to open

lower on Wednesday, as concerns around the timing and scale of

the Federal Reserve's interest rate cuts pushed Treasury yields

higher and pressured megacap stocks.

Microsoft ( MSFT ), Alphabet and Meta

dipped between 0.7% and 0.8% in premarket trading as U.S. bond

yields across the board rose to near four-week highs.

Conflicting expectations on the size and timing of interest

rates have kept the market on edge since the start of this year.

Rising bond yields typically reflect expectations of higher

interest rates, which mean costlier financing and smaller profit

margins for companies.

Traders began the year expecting cuts by March, but sticky

inflation and hawkish comments from central bankers have

dampened expectations to a 25 basis points cut only by November

or December, as per the CME FedWatch Tool.

"The Fed is in a conundrum, with strong growth numbers and

yet, inflation does not seem to be responding to anything. Oil

prices are also rising and that's pressuring the market a little

as well," said Robert Pavlik, senior portfolio manager at Dakota

Wealth Management.

"Folks are saying, 'what's the reason for me to be buying

right now?'" said Pavlik.

The CBOE Volatility Index, a Wall Street fear gauge,

hit its highest levels since May 3.

The central bank's Beige Book, due at 2:00 p.m. ET on

Wednesday, is expected to throw light on the state of the U.S.

economy. Markets will also closely monitor comments from this

year's voting policymakers, including New York President John

Williams and Raphael Bostic.

But the main focus this week is on Friday's release of

April's Personal Consumption Expenditure data - the Fed's

preferred inflation gauge.

At 8:26 a.m. ET, Dow e-minis were down 225 points,

or 0.58%, S&P 500 e-minis were down 32.5 points, or

0.61%, and Nasdaq 100 e-minis were down 126.5 points, or

0.67%.

Futures tracking the Nasdaq led declines, after the

tech-heavy index closed above the 17,000 mark for the

first time on Tuesday, driven by gains in Nvidia ( NVDA ) and

fellow chip stocks.

However, the benchmark S&P 500 index ended flat and

the Dow closed lower as unexpectedly strong consumer

confidence data left market participants doubting the

possibility of an imminent start to Fed's monetary policy easing

cycle.

Marathon Oil ( MRO ) advanced 9.1% after ConocoPhillips ( COP )

said it would buy the Houston-based company in an

all-stock deal for a little over its $15 billion market value.

American Airlines ( AAL ) cut its second-quarter profit

forecast on weaker pricing power, sending its shares down 8.8%.

Fellow carriers such as Southwest ( LUV ) and Delta were

also down over 2.4% each.

DICK'S Sporting Goods jumped 8.2% after lifting

forecasts for annual sales and profit, while Abercrombie & Fitch ( ANF )

raised its annual sales growth forecast, sending shares

of the retailer up 1.4%.

Broadly strong corporate earnings have helped offset rate

worries. Of the 480 companies in the S&P 500 that reported

earnings as of Friday, 77.9% surpassed analyst estimates versus

a long-term average of 66.7%, according to LSEG data.

(Reporting by Johann M Cherian and Lisa Pauline Mattackal in

Bengaluru; Editing by Shinjini Ganguli)