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Updates before markets open

By Shashwat Chauhan and Kanchana Chakravarty

May 21 (Reuters) - Wall Street's main indexes were set for a lower open on Wednesday, as investors awaited the outcome of a pivotal debate around U.S. President Donald Trump's tax-cut bill that has fanned concerns about the country's growing debt.

The gate-keeping House Rules Committee has scheduled an unusual 1 a.m. ET hearing that is expected to run well into daylight hours, as Republicans try to overcome internal divisions about cuts to the Medicaid health program and tax breaks in high-cost coastal states.

Nonpartisan analysts say the proposed plan could add $3 trillion to $5 trillion to the federal government's $36.2 trillion in debt.

"(We're seeing) the American exceptionalism narrative unwind, so you have a natural process of something weakening after years of concentration," said David Russell, global head of market strategy at TradeStation.

"We're kind of pouring gasoline on the fire with tariffs and all of this budgetary uncertainty."

At 08:26 a.m. ET, Dow E-minis YMcv1 were down 301 points, or 0.7%, S&P 500 E-minis EScv1 were down 30.25 points, or 0.52%, and Nasdaq 100 E-minis NQcv1 were down 117.5 points, or 0.55%.

U.S. bonds have been under pressure since the start of the week, when Moody's downgraded the country's sovereign credit rating. On Wednesday, yields on the 30-year note US30YT=RR were back up to 5.02% and the benchmark 10-year US10YT=RR yield climbed 5.8 basis points to 4.53%.

Federal Reserve officials said on Tuesday they expected tariffs to push up prices, but counseled patience before any interest-rate decisions were made.

Highly valued technology stocks took a hit in premarket trading as rising rates tend to discount the present value of future profits.

Amazon AMZN.O, down nearly 1%, led losses among top megacap and growth stocks.

UnitedHealth Group UNH.N dropped 3.9% after a Guardian report said the healthcare conglomerate secretly paid nursing homes thousands in bonuses to help slash hospital transfers for ailing residents. HSBC also downgraded the stock to "reduce" from "hold".

On the earnings front, retailer Target TGT.N fell 5.6% after slashing its annual forecast due to a pullback in discretionary spending. Lowe's LOW.N gained 1.6% after it posted a smaller-than-expected drop in first-quarter comparable sales.

Wolfspeed WOLF.N tumbled 63.3% to $1.16 following a report that the semiconductor supplier was preparing to file for bankruptcy within weeks.

U.S. stocks closed lower on Tuesday, with the S&P 500 snapping a six-day winning streak while the Dow .DJI logged its first decline in four sessions.

Despite the losses, they have had a solid month so far. The S&P 500 has climbed more than 17% higher from its April lows, when Trump's reciprocal tariffs roiled global markets.

A pause in the tariffs, a temporary U.S.-China trade truce and tame inflation data have pushed equities higher, although the S&P 500 is still about 3% off its record highs.

Brokerage Morgan Stanley upgraded its stance on U.S. equities to "overweight", saying the global economy was still expanding, albeit slowly, amid policy uncertainty.

(Reporting by Shashwat Chauhan and Kanchana Chakravarty in Bengaluru; Editing by Pooja Desai and Devika Syamnath)

((Shashwat.Chauhan@thomsonreuters.com;))