WALL Street's top indexes were set for a lower open on Wednesday as investors assessed mixed earnings from Microsoft and Alphabet ahead of a Federal Reserve rate hike that could push borrowing costs to their highest since the global financial crisis.
Microsoft eased 3.3% in premarket trading after laying out an aggressive spending plan to meet demand for its new artificial intelligence (AI)-powered services. The Windows maker still surpassed estimates for quarterly revenue and profit.
On the other hand, Alphabet gained 6.4% after the Google parent's second-quarter profit exceeded Wall Street expectations on steady demand for its cloud services and a rebound in advertising.
The NYSE FANG+ index, which houses many megacap growth names, has rallied 76.5% so far this year on optimism over AI and hopes that the Fed is nearing the end of its rate hiking cycle.
"Artificial intelligence has really taken the front of the stage from last quarter's earning season," said Peter Andersen, founder of Andersen Capital Management.
"But I believe some companies have gotten a little bit ahead of themselves and are overpromising what artificial intelligence can do for their companies in such a short time span."
Meta Platforms rose 2.3% after Alibaba's cloud unit said it would support the Facebook owner's open-source AI model, Llama. Meta is also expected to report quarterly results after the bell.
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Fed is expected to deliver a 25-basis point interest rate hike later in the day, though there is less clarity over what the central bank will do at its subsequent meetings.
"The key question is what comes next. The dot plot still shows room for another 25bp hike this year, but recent inflation figures don't signal urgency," said Stefan Koopman, senior macro strategist at Rabobank.
At 8:21 a.m. ET, Dow e-minis were down 63 points, or 0.18%, S&P 500 e-minis were down 8.25 points, or 0.18%, and Nasdaq 100 e-minis were down 52 points, or 0.33%.
The blue-chips Dow extended its winning streak to a 12th straight session on Tuesday, driven by strong healthcare and financial earnings and some rotation out of tech stocks.
Boeing added 3.3% after the planemaker posted a smaller-than-expected quarterly loss, along with a surge in cash flows.
Coca-Cola added 1.1% after the beverage maker raised its annual revenue and profit forecasts.
Snap sank 17.5% after the photo messaging app owner gave a weaker-than-expected third-quarter forecast as it struggles to compete with tech giants for advertising dollars.
Thermo Fisher Scientific tumbled 5.1% as the medical equipment maker cut its annual profit forecast, while Union Pacific gained 7.6% after the railroad operator appointed Jim Vena as chief executive to succeed Lance Fritz.
Amazon.com fell 1.7% after a media report that the Federal Trade Commission was finalizing an antitrust lawsuit against the company.
Wells Fargo climbed 2.7% after the bank's board authorized a new share buyback program of up to $30 billion. - Reuters
