Wall Street set to open flat as Fed divided on rates

By Tanya Agrawal

(Reuters) - Wall Street looked set to open little changed on Thursday, a day after minutes of the Federal Reserve's July meeting showed policymakers were divided over whether to raise interest rates in the near-term.

Fed officials were generally upbeat about the U.S. economy but some expressed the need to keep their options open in the need of more data pointing to strength, the minutes showed.

While traders have almost completely ruled out a hike in September, they have priced in a 41.7 percent chance for a move in December - down from 45.1 percent on Wednesday, according to CME Group's FedWatch tool.

"The market has reached a comfortable level and needs a fresh catalyst to send stocks higher," said Art Hogan, chief market strategist at Wunderlich Securities in New York.

"The Fed was less hawkish than the market had expected. They would like to get one rate hike behind them this year because they've been too low for too long."

The S&P 500 has been higher in six of the last eight weeks and the market has touched new records on the back of better-than-expected corporate earnings, supportive monetary policy and a robust labor market.

Dow component Wal-Mart rose 3 percent to $75.13 premarket after the retailer posted better-than-expected quarterly profit.

S&P 500 e-minis were down 2.25 points, or 0.1 percent, with 129,629 contracts traded at 8:32 a.m. ET (1232 GMT). Nasdaq 100 e-minis were down 6 points, or 0.12 percent, on volume of 18,892 contracts. Dow e-minis were down 10 points, or 0.05 percent, with 15,322 contracts changing hands.

New York Fed President William Dudley, who on Tuesday unnerved the markets by saying a rate hike was possible in September, is scheduled to give a press briefing at 10:00 a.m.

San Francisco Fed President John Williams speaks on economic outlook in Anchorage, Alaska at 4:00 p.m. ET.

Data showed the number of Americans filing for unemployment benefits fell more than expected last week, with initial claims for state unemployment benefits dropping to 262,000. Economists polled by Reuters had forecast claims slipping to 265,000.

Brent crude hovered near $50 a barrel for the first time in six weeks after major producers prepared to discuss a possible freeze in output. U.S. crude was trading near $47. [O/R]

Twitter fell 2.6 percent to $19.64 after Evercore downgraded its stock to "sell" from "hold".

Cisco was off 1.7 percent at $30.20, after the company reported a 1.6 percent drop in revenue and said it would cut jobs.

Valeant Pharma's U.S.-listed shares were up 4.9 percent at $31.49 after the drugmaker said it received approval from a lender to amend its credit facility.

(Reporting by Yashaswini Swamynathan and Tanya Agrawal in Bengaluru; Editing by Saumyadeb Chakrabarty)