January 8, 2018 / 2:10 PM / a year ago

US STOCKS-Wall Street's new year rally set to lose steam

* Caterpillar eyes record open on brokerage upgrade

* Bank stocks decline premarket

* Futures down: Dow 18 pts, S&P 5 pts, Nasdaq 12.5 pts (Adds comment, updates prices, adds details)

By Sruthi Shankar

Jan 8 (Reuters) - U.S. stock markets were set to open lower on Monday, losses for banking stocks helping put a halt to Wall Street’s strongest start to a year in a decade.

The Dow Jones Industrial Average last week recorded its best first four trading days in a year since 2003. For the Nasdaq and the S&P 500, it was the strongest start since 2006.

“We had a strong market in the past week, and what generally happens in the first week sets the trend for the remainder of the year. Now that it’s established, there could be some profit- taking,” said Peter Cardillo, chief market economist at First Standard Financial in New York.

At 8:36 a.m. ET (1336 GMT), Dow e-minis were down 18 points, or 0.07 percent, with 27,390 contracts changing hands.

S&P 500 e-minis were down 5 points, or 0.18 percent, with 138,078 contracts traded.

Nasdaq 100 e-minis were down 12.5 points, or 0.19 percent, on volume of 25,860 contracts.

The dollar inched higher against a basket of major peers with data showing that slower U.S. jobs growth did little to dent expectations for further interest rate increases this year.

Comments by some Federal Reserve officials on Friday and over the weekend suggested the U.S. central bank remained on track to raise interest rates in 2018.

“The dollar is reversing and we’re seeing that effect due to some Fed comments,” Cardillo said.

A stronger dollar tends to weaken revenue of U.S. companies that earn much of its income from abroad.

Investors are waiting for earnings reports to see how much companies would benefit from the recent tax cuts. The fourth quarter earnings season will kick off later this week, starting with big banks.

Caterpillar climbed 1.64 percent and was set for a record open after JP Morgan upgraded the stock, saying the tax overhaul could help construction business cycle to extend into 2018.

Bank of America, Goldman Sachs, JPMorgan and Wells Fargo were down between 0.2 percent and 0.4 percent. Most big U.S. lenders have estimated one-off charges to their fourth quarter earnings on account of tax cuts.

Nvidia rose 2.4 percent after the graphics chipmaker announced partnership with Uber and Volkswagen as its artificial intelligence platforms expand into technology for self-driving cars.

Pandora Media slipped about 4.3 percent after Morgan Stanley downgraded its stock to “equal-weight” on concerns about slowing advertising revenue in 2018. Investors will focus on speeches from Fed’s Atlanta President Raphael Bostic, San Francisco Fed chief John Williams and their Boston counterpart Eric Rosengren for their views on monetary policy. (Reporting by Sruthi Shankar in Bengaluru; Editing by Arun Koyyur)

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